Posted by Tiffany Yang ● Feb 6, 2020 9:00:00 AM

What to Consider When Refinancing Your Hard Money Loan

At Visio Lending, we pride ourselves on our fast, simple and dependable loan process which enables investors to quickly grow their real estate portfolios. Often, our team refinances subject properties out of hard money loans due to their short terms and ugly interest rates. This strategy entails using hard money loans and/or cash to complete renovations, followed by a refinance as a long-term rental to then take out your capital to keep growing.

If you’re considering using this strategy or you’re at the point of needing to refinance your hard money loan, consider these few things suggested by one of Visio’s top producing Account Executives, Tracy Gordon.

1. Most conforming loans (typically from banks or traditional lenders) require longer seasoning to refinance.

Ultimately, investors need better terms to redirect their capital to keep the momentum of growing their portfolio steadily. Our team understands that urgency of redirecting capital.

2. When refinancing, some banks and lenders do not use a new appraisal for the subject property.

This should be a red flag for investors who are renovating properties because lenders will not consider the after-repair value (ARV), which is vital for attaining the desired LTV.

3. Make sure the property is turn-key with no deferred maintenance, meaning it is rent-ready for a tenant.

If you’re at the end of your hard money loan, your renovations should be almost done if not completely done at this point. You should make sure you have ample time to shop around for the right refinance program. Tracy mentions that it can get messy for any investor, especially if they receive any penalties or have a balloon payment on their hard money loan.

4. Be credit conscious. The better credit you have, the better terms you’ll get.

We are no stranger to high credit utilization. Many investors have high credit utilization, especially when growing their portfolios and especially if subject properties need renovations. Luckily, with Visio Lending you can obtain a loan under your LLC, allowing you or partner(s) to utilize the higher FICO score.

5. Bonus Tip: Partner with an alternative lender who isn’t just a lender, but a true financial partner.

They can help you run scenarios to confirm adequate income and cash-flow on the subject property. If you’re interested in learning more or discussing more details about our refinance program, contact Account Executive, Tracy Gordon.


Topics: Real Estate Investing, Hard Money Lenders, Maximizing Rental Profits, The Visio Box