Refinancing out of a 30 year fix hard money loan

[Oscar Hernandez]

Hi am new to real estate I am trying to get a property that needs rehab I was thinking of using a 30 year loan from a hard money lender so I can hold the property for the long run. Would I be able to Refinance from the hard money in to a Bank loan to get a lower interest rate?

[Account Closed]

You can use a hard money loan to purchase and renovate the property. Once it is fixed, you can refinance into a long-term bank loan with the after repair value. But most banks requires a seasoning period 6+ months.

[Chris Cambridge]

You'll be looking into an interest only loan not 30 year.

[Doran Summers]

@Oscar Hernandez best to use hard money then refi with a bank.

[Oscar Hernandez]

Originally posted by @Chris Cambridge:

You'll be looking into an interest only loan not 30 year.

Do you get those from a hard money lender or bank?

[Torrell Palmason]

Typical hard money is 10 to 12 percent interest only for 6-12 months, just long enough to get you through acquisition and rehab. Then you can do a no cash out refi with no seasoning requirement or if you want cash out it requires 6 months seasoning on title. So plan your rehab accordingly.

Best of Luck! 

[Paul Welden]

@Oscar Hernandez

Hard Money Lenders are short term interest only loans ... typically 6-12 months at 10%-15% interest rate, as @Torrell Palmason mentioned. 

You're not going to get a 30 year fixed mortgage with a HML.

If you want to hold on to the property long term, why start with a HML?

If you are looking for a purchase + rehab loan, look into the FHA 203k, Homestyle, and the CHOICERenovation loans.

[Oscar Hernandez]

Thanks for the feedback. In my case I am using a HML because I only have capital and not any of the documents that you need for bank loans fha etc..

[Tom S.]

@Oscar Hernandez If you don't have any of the documents needed for a conventional loan, how are you going to refi out of the HML into a conventional loan? HML is short term, as others mentioned above, and the HML will want to see a clear exit strategy. You do always have the option to sell after the rehab is complete of course.

[Stephanie Medellin]

@Oscar Hernandez  If you're using hard money to purchase the property, not only due to the condition of the property but also because you've found you can't qualify for a conventional loan, you will have the same qualification issues when you try to refinance.  The income / asset / credit requirements are going to be the same.

There are investor loan programs that don't require tax returns or pay stubs, but they typically have minimum loan amounts and credit requirements.  You will also need enough equity in the property.  I would recommend making sure you can qualify for one of these loans before getting into a hard money loan.  What state are you buying in?

[Oscar Hernandez]

My credit score is almost at 800 so credit I’m not worried about but I don’t have any pay stubs /tax returns to show as of now & I’m buying in New Jersey & Chicago IL.