{"id":2841,"date":"2021-07-14T23:23:00","date_gmt":"2021-07-14T23:23:00","guid":{"rendered":"https:\/\/www.coastalcapital.com\/?p=2841"},"modified":"2021-12-17T21:49:22","modified_gmt":"2021-12-17T21:49:22","slug":"refinancing-out-of-a-hard-money-loan","status":"publish","type":"post","link":"https:\/\/www.coastalcapital.com\/refinancing-out-of-a-hard-money-loan\/","title":{"rendered":"REFINANCING OUT OF A HARD MONEY LOAN"},"content":{"rendered":"\t\t
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Many people secure a hard money loan for real estate with the intent of buying an off-market deal, flipping a home, cashing out for quick business needs, or paying off a note that is coming due. However, sometimes circumstances make it difficult to refinance the loan, leaving borrowers feeling stuck between a rock and a hard place. <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If you\u2019re looking to refinance out of a private loan, there are a few important steps you might need to take before you\u2019re able to get a traditional loan.<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Renovate The Property<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Traditional banks have certain requirements for the condition of a property in order to get a loan. If you bought a fixer-upper, you\u2019ll have to do some of the fixing up before you can refinance. In order to qualify for a conventional loan, the property must be \u201csafe, sound, and structurally secure,\u201d so prioritize your improvements based on these factors. You must also have a certificate of occupancy and no code violations, so be prepared to tie up any necessary loose ends. <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Make Tenant Improvements<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If you own a commercial property, make the types of tenant improvements that will make it easier to rent to the types of tenants you are seeking. Some examples of tenant improvements include painting; installing lighting, flooring, and drop ceilings; and adding walled offices, a break room and kitchen, additional bathrooms, and conference rooms.<\/p>

Most conventional lenders won\u2019t provide loans for commercial properties that aren\u2019t occupied. Ideally, rent out the space to make it more viable for a conventional loan. This might require you to make certain improvements after the space is occupied so you can get a rental agreement in place before refinancing.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Improve Your Credit<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The minimum credit score requirement for a conventional loan is 620. If your score doesn\u2019t meet the criteria, work on improving it so you can refinance. Some strategies you can use include:<\/p>

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  • Get a free copy of your credit report to see where you need to improve.<\/li>
  • Build a history of on-time bill payments.<\/li>
  • Keep credit card balances at 30 percent or below your credit limit, ideally as low as 10 percent.<\/li>
  • Ask for a credit limit increase to get your balance percentage down.<\/li>
  • Avoiding applying for new credit because inquiries from new creditors can temporarily lower your credit score.<\/li>
  • Setup a prepaid credit card if you don\u2019t qualify for a regular card<\/li>
  • Keep old credit cards open, even if you don\u2019t use them.<\/li>
  • Consider debt consolidation.<\/li>
  • Monitor your credit score so you know how you\u2019re doing.<\/li>
  • Avoid large purchases (vehicles, boats, timeshares, etc.) before applying that add debt to your report.<\/li><\/ul>

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    Consider working with a credit repair company to help you knock off items that have the largest impact on your credit. Getting guidance from a professional can help you prioritize your efforts to refinance out of a hard money loan so you can qualify for a traditional loan more quickly.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    File Your Taxes<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    Conventional lenders base decisions on your tax returns, so if you need to get caught up on filing, now is the time. Gather the tax documents you have to see what\u2019s missing. You might need to request missing documentation from an employer or the IRS to fill in the gaps. Work with a professional tax preparer to ensure accuracy and completeness. Be prepared to pay penalties and interest charges for any late payments or filings. If the cost of amending your taxes to correct your underreported income is minimal, that might be enough to get you above the debt-to-income hump, so it\u2019s worth the effort if you\u2019re trying to refinance out of a hard money loan.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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    Don\u2019t forget to inquire all fees ahead of time before signing your loan docs including prepayment penalties.\u00a0 If you would like to learn more about hard money loans and how you can use them for flipping homes and a broad range of other real estate investments, leave us a message here give us a call.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    Open the Door to Modern Real Estate Investment<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    Earn Consistent Stable Returns<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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    []<\/div>
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