How to Refinance a Hard Money Loan

March 15th, 2010 1 Comment   Posted in Articles

The hard money loan is usually one that is provided by a private lender or individual who has money to loan as an investment. The loan is usually based on the value of the assets. Each loan will vary in its terms depending on the holder of the loan but this type of loan is always very strict in comparison to traditional lenders and the rate of interest on the loans will be much higher than other types. Usually the hard money loan will need a thirty percent down payment.

If you do have a property or a foreclosure that you have purchased using hard money funding it is possible to do a refinance of the loan and turn it into the conventional mortgage. When doing this the borrower needs to be very careful about the terms of both types of financing. Before beginning the process to refinance, the borrower should be very sure they will qualify for the loan. Hardmoney lenders usually don’t require a credit score that is high but conventional loans put great significance on the score.

Other qualifications have to do with seasoning. This is a term used which is about the length of time that the seller has owned the property. Refinancing of a loan can be contingent on the seasoning of the hard money loan. This happens to be a variable with different loan institutions so the borrower or seller needs to know they can meet these requirements before any deal is constructed. A loan that is the primary residence of the borrower will not be from a hard money investor. This is also a consideration for refinancing with any traditional funding.

When the refinance is to take place, the current value of the home will need to be verified and anything that has been repaired or fixed will need to be validated with paperwork and receipts about each update done to the home. The seasoning issues of the home may make it so that the investor will have to wait up to a year before beginning any refinancing.

The terms of the conventional loan, the terms of the original hard money mortgage loan, the credit rating of the applicant, and the seasoning requirements will all dictate whether refinancing of the hard money loan is possible. Hard money foreclosure can be stopped by refinancing but finding the best service on the market today will take some investigation by researching and comparing options. There are reputable stop foreclosure specialists available that help with finding the best service for refinancing.

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