Hard money loans provide many benefits to borrowers, such as having minimal requirements for approval and their ability to provide funding that most banks cannot offer. Once borrowers and real estate owners are approved for a hard money loan and have stabilized their property, it’s common for them to look at refinancing their hard money loans. Stabilizing their property can include getting longer term tenants, charging market rents, or completing the required rehab.
Refinancing your hard money loan gives you a significantly lower interest rate and helps you lock-in longer term financing.
The following are two primary options for refinancing your hard money loan:
- Traditional Bank:
Refinancing with a traditional bank is similar on your investment property as it would be on your personal residence. This means it typically requires a significant amount of documentation and can take anywhere from 2 to 6 months. Financing availability could be as long as 30 years.
- “Rental Loan” from an Alternative Lender:
The underwriting process for a rental loan is in-between a bank and a hard money loan. The property value is important, but so is the proof of rental history, income, and market leases. A rental loan from an alternative lender requires less documentation, but the process can still take up to several weeks. The financing length is anywhere from 5 to 30 years.
Steps for Refinancing Your Hard Money Loan
The process for refinancing your loan typically involves the following steps:
Select your new lender and go through the underwriting process.
Once formally approved by your new lender, request a payoff letter from your hard money lender. A payoff letter states the principal owed, accrued interest through the anticipated payoff date, and any associated legal fees
Setup the closing date for the refinancing loan.
On the closing date, your lawyer or escrow agent will send the funds from the new lender to your hard money lender.
Your hard money lender will sign a satisfaction of mortgage and your new mortgage will be recorded.
Get Your Hard Money Loan with West Forest Capital
There’s never been a better time to apply for a hard money loan. West Forest Capital provides funds to real estate investors and others looking to finance non-owner-occupied real estate. We fund property types which include:
We provide rehab funds, or full construction costs, as needed. We also provide fast closings, almost always less than 10 days, and often as quick as 3 to 5 days. We’ve even previously closed a brand new loan in one day! We lend in New Jersey, New York, Connecticut, Massachusetts, Pennsylvania, and Florida.