Hard money loan repayment ? for brrrr deal

[Michael Nelson]

If I use a hard money loan for a brrrr and the ARV comes in a little lower than projected can i pay off say 170k of the 200k hard money and just keep paying the interest on the remaining 30k of hard money until i can pay that off? obviously the goal would be to pay the whole amount off but I Just want to check into all the "what ifs"

Any input is greatly appreciated

[Randall LeBlanc]

I'm not sure of your current loan terms; however, most hard money will balloon in 6, 12, or 16 months. 

At that point, the whole note becomes due. 

Also, when refinancing into long term debt a lender is going to have loan to value limits. The most common is 70% or 75% of the home's value. 

For example,, if the house was worth $200k and the lender needed a 75% loan-to-value, they would only allow for $150k financing on the house. 

If this were the case for the deal above, you would have to bring in $50k to do a refinance and raise the loan-to-value limit to 75%.