Hard-money and bridge loans are built to be short. When yours is coming due, a refinance into a long-term loan pays it off, lowers your cost and can take cash out if the property is worth more now.
Your options
- A DSCR loan qualifies on the property’s rent, closes in an LLC and suits rentals and finished flips you keep. How DSCR loans work.
- A conventional loan usually costs least if your income qualifies and the property is in your name. Conventional loans.
- A cash-out refinance pays off the short-term loan and returns part of the new value, if the work added equity. Cash-out refinance.
- Another bridge loan buys time if the project isn’t ready for long-term financing. Bridge and construction loans.
Timing and seasoning
Start early. Many long-term lenders want you to have owned the property for a few months before they lend on a new appraised value instead of what you paid, and some want the renovation finished and the unit rented. Planning around your maturity date avoids paying for an extension.
- Three to six months before maturity: send me the scenario, so we can choose the program and the timing.
- Before applying: finish the work, get a lease or rental history if it will be a rental, and gather the renovation invoices.
- At application: the appraisal sets the new value; the new loan pays off the short-term lender directly at closing.
What lenders will ask for
- The payoff statement from your current lender.
- For a rental: the lease or a market rent estimate, so the DSCR can be worked out (DSCR calculator).
- Proof of the work done, if you want the higher value counted.
- For an LLC: the articles, operating agreement and EIN letter (document checklists).
Guides and calculators
- DSCR investor loans
- DSCR calculator
- Cash-out refinance calculator
- Construction & bridge loans
- Rehab & code case loans
- Private and short-term lenders
Questions
How soon can I refinance a hard-money loan?
Some lenders will refinance right away based on what you paid; to use a higher appraised value, many want a few months of ownership first. Send me your dates and I’ll tell you which lenders fit.
Can I take cash out when I refinance?
Often, yes, if the property is worth more than you owe. The cash-out amount depends on the new appraised value and the lender’s loan-to-value limit.
What if my loan matures before I can refinance?
Ask your lender about an extension early, and line up the refinance in parallel. A short bridge to a long-term loan is another option.
