4 Options for Refinancing a Hard Money Loan

Using a hard money loan can often be a good way to help get you through tough economic times. However, this type of loan is only designed to be a temporary fix. This means that you may have to come up with a way to refinance the loan at some point. Here are a few options for refinancing a hard money loan.

1. Fixed Mortgage

If the hard money loan was taken so that you could purchase or retain a property, you might want to consider getting a fixed mortgage instead. Many people get hard money loans when they are close to foreclosure on their existing home. This is done because they cannot qualify for a traditional mortgage refinance. If this is the case, the hard money loan might have provided you with enough time to pay down debt and rebuild your credit.

Getting a fixed mortgage can provide you with a long-term solution and a low, fixed rate. You should be able to shop around since this is a very common type of financial product in the market. If your credit has improved, there is a chance that you will be able to secure a good fixed mortgage and pay off the hard money loan.

2. Subprime Lending

Another type of loan that you may be able to get is available in the subprime lending market. Subprime lenders often work in conjunction with traditional lenders for those that do not qualify for a traditional loan. If your credit is not good enough to get a traditional fixed mortgage, they might refer you to a subprime lender that they work with.

Subprime lenders regularly work with those that have low credit scores and high debt to income ratios. These types of lenders will often offer alternative forms of loans. For example, you might have to agree to an adjustable-rate mortgage or an interest-only mortgage. This will provide you with a long-term solution even though you might have to agree to a higher interest rate.

3. Home Equity Loan

If the hard money loan was not designed to pay for your home, you might be able to pay it off with a home-equity loan. This will only work if you have built up equity in your home and have sufficient credit to get approved. Sometimes, people turn to hard money loans when they cannot get approved for a home-equity loan. Then after a few years, they might be able to get approved and need to refinance the hard money loan. Home equity loans can be a great solution because they have low interest rates and a fixed payment schedule.

4. Cash Advance

If the hard money loan was relatively small, you might be able to get a cash advance loan for the balance. This would not be an ideal solution because of the high interest rates that these companies charge. However, if you are close to the deadline for a large balloon payment for your hard money loan, this might be an alternative.

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