Refinancing your Forclosures

I would like to shed some light on refinancing hard money loans. Hard money loans can have an interest rate ranging from 8% to 22%, so refinancing into a 7% loan can save you interest expense. Most hard money refinances I see come from the purchases of foreclosure. Since the future of forclosure investing is strong in most areas it is good to have an exit strategies from a hard money loan.

Things to think about with a hard money loan:

What is your interest rate?
Are there any balloon payments due? When?
Do you have an extension fee to extend the length of your loan period?
Are you selling or renting your foreclosure when any rehab is done?

Things to think about when refinancing from hard money loan to conventianal loan:

What is your long term holding plan?
Do you need to get cash out?
What are the costs/break even of the new loan?
Is your property listed on MLS?
What is the condition of the property?

Let me share a few of my experiences with refinancing hard money to conventional:

I've had a number of properties that where in poor shape and could not qualify for conventional financing, unless we utilized a rehab loan to fix the place up.
I've had a few properties on MLS which is an obstacle to 90% of the lenders out there, but can still be done. Your lender selection is just limited.
I've had people in really good hard money situations and advised them to keep their loan.
I've refinanced hard money loans at 15% and refinanced them into conventional loan rate of 6.875%
Keep in mind every single refinance is situational, so do your diligence on your property, the hard money loan terms and exit strategy.

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Troy Schuricht
480-305-8905
troy@cffinfo.com