Paying off a hard/ private money lender?

[Bridget Huebner]

I was wondering if anybody, in the most Real Estate for Dummies way possible, could walk me through the process of paying off a private/ hard money loan using a conventional mortgage?

(Forgive me for this next part, I'm trying to understand this process and have not been able to find the answers I need!)

For clarification, I buy a house that does not qualify for a regular ole 30-year mortgage right? Let's say it has a foundation issue. I have a private party pay for the house. Before my balloon payment after a year or so, this property would now qualify for a conventional mortgage! Yay! Can I get a mortgage on this place to pay off the lender and then keep the property for myself as a rental?

Someone, anyone, please hold my hand and walk me through this process and tell me anything I need to know. Thank you!