The Rules to know when refinancing your Hard Money Loan

Mortgage and Lending with - Legend Lending NMLS #293883

Many times a Hard Money loan is a life saver in the real estate industry. It can get you approved for a mortgage when maybe the property needed work, etc. Thou these loans are short term answers and you will need to refinance into a conventional mortgage eventually. Before you go into getting a Hard Money loan here are the Rules to keep in mind when refinancing that loan:


  1. How soon can I refinance my hard money loan?- If you want to refinance the balance you owe you can do this as soon as you own the property. But you will need an appraisal done that shows the value now that the work has been done to the home. If very little or no work has been to the home then you will most likely be stuck using the original sales price which will affect your options and how much money you will need at closing.

  2. How soon can I get Cashout loan?- You must own the property 6+ months to do a cashout loan. This loan would pay off the Hard Money Loan and allow you to take 75% of the property’s appraisal value for the new loan amount. This is based on the property being an investment or rental property. If the hard money loan was used to buy your own home the % you can borrow is higher.

  3. Keep All Receipts and Invoices!!- Any time you try to refinance a loan after buying the property recently, you have to really document the work done so to prove to an underwriter and appraiser.   This means you need to keep all the receipts and invoices. And I even suggest doing before and after photos. Keep in mind if you have done little to no work then most likely the appraiser will value the home at what you bought it for, since your own home would be used as an example of what the value is. So in theory your own property’s sales price would shoot you in the foot and make it difficult to get a higher value.

  4. A 2nd appraisal may be needed- Most likely in this situation a 2nd appraisal will be needed do document the value of the property. So keep this additional cost in mind.



    When getting a hard money loan it is important to know these rules for refinancing to a conventional loan. The rules I just out lined are based on the minimum requirements for refinancing a hard money loan and the specific Fannie Mae rules that we follow. But your mortgage lender may have stricter rules, so call me today if you are need of refinancing your hard money loan.

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David Krichmar 

Mortgage Banker NMLS#293883 

Legend Home Lending

LLC NMLS #229421

Has Written For Realtor Magazine, Houston Agent Magazine, Scotsman Mortgage Guide

Appeared On Fox Business


Named 5 Star Mortgage Professional 2013, 2014, 2015, 2016, 2017

Named Top Mortgage Professional 2010,2011


For More Mortgage Info Follow me at  Dave's Blog


If you are looking for a FHA, VA, USDA, Homepath, Conventional, Jumbo, Construction, FHA 203k mortgage in Fort Bend County, Sugar Land, Houston, Katy, Harris County, Brazoria County, Pearland, Richmond, Bellaire, West University, The Woodlands, Kingwood, Friendswood, Clear Lake, Galveston, Fulshear, Tomball, Spring, Conroe, Montgomery County or anywhere in Texas I am your GUY!  


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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

David, great information for those buyers that use hard money to do their purchases.

Aug 03, 2016 09:30 AM #1
David Krichmar - Legend Lending - Sugar Land, TX

Thanks Joan!

Aug 04, 2016 01:18 AM #2
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