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Navigating the Transition: A Guide to Refinancing Out of Hard Money Loans

Real estate investors that are looking to grow their wealth in the real estate market without putting up high levels of personal capital often turn to hard money loans. These loans make an excellent financing option for varying situations and property types.

Each hard money lender will have their own set of requirements for funding a loan. Regardless of the specific lending requirements of each lender, it’s important to understand that hard money loans are a short-term solution, meaning borrowers should have an exit strategy in mind when utilizing this type of financing.

Benefits of Hard Money Loans

For many real estate investors, the challenge lies in not having immediate access to the necessary cash to purchase investment properties outright. This is where hard money loans fill the gap in cash shortages. These loans offer a competitive edge to real estate investors, providing swift access to funds. The approval and funding processes are notably quicker than those of traditional lenders, resembling the rapidity of a cash transaction. This speed is not only advantageous but also appealing to sellers, minimizing the risk of transactions falling through due to financing delays.

Despite the advantages that hard money loans bring, it’s important to recognize that they are tailored for short-term financing needs. Most hard money loans come with terms of 12 months, underlining the necessity of having a well-thought-out exit strategy, such as refinancing the property.  Refinancing ensures that investors can smoothly transition from the short-term benefits of a hard money loan to a more sustainable, long-term solution.

A Guide to Refinancing Out of Hard Money Loans

Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained in this message is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. (the “Manager”). Any and all information herein is deemed reliable but is not guaranteed.

A Guide to Refinancing Out of Hard Money Loans

 

Refinancing with a Traditional Lender

Hard money loans provide a quick solution for real estate transactions, whereas conventional loans are geared towards long-term financing. Refinancing is one of the most common exit strategies for hard money loans. Refinancing with a traditional lender offers borrowers the ability to pay off the hard money loan in its entirety while providing a sustainable solution with potentially lower rates.

Since conventional loans can take more time to underwrite, borrowers need to factor in the processing time to meet their hard money loan payment date. Refinancing out of a hard money loan with a traditional lender typically involves several key steps. A conventional loan will have both financial and property requirements. The financial requirements might entail pulling credit, evaluating any debt burdens, and looking into the borrower’s cash on-hand. If approved, the hard money loan is paid off, and the borrower transitions to the terms and conditions of the conventional loan.

Summary

In conclusion, hard money loans offer real estate investors a swift solution for property acquisitions, yet they necessitate careful planning due to their short-term nature. Refinancing with a traditional lender presents an effective exit strategy, enabling borrowers to transition to a sustainable, long-term financing solution with potentially lower rates. Since 2011, our team at Wilshire Quinn Capital has provided borrowers with a comprehensive understanding of the entire bridge lending process, from start to finish, in order to help them achieve their real estate goals. Discuss further with a Wilshire Quinn team member today.

  • Funding typically in 5-7 business days
  • Loan Amounts from $500,000 to $20,000,000

  • Interest Rates from 9% to 12%

  • Loan Term: 6 – 18 months

  • Commercial & Residential (non-owner occupied) Real Estate

  • Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
  • Foreign National Loans Available

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About Wilshire Quinn

Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.

Recently Funded Hard Money Loan Transactions

Slide Hollywood, California Hard Money Bridge Loan Funded LOS ANGELES, CA Loan Amount: $5,075,000 Loan Type: Refinance Property Type: Multi-Family Loan-To-Value: 64% Term: 12 Months San Clemente, California, Hard Money Cash Out Refinance Loan Funded SAN CLEMENTE, CA Loan Amount: $2,580,000 Loan Type: Refinance Property Type: Single-Family Loan-To-Value: 59% Term: 12 Months BERKELEY, CA Loan Amount: $3,575,000 Loan Type: Purchase Property Type: Multi-Family Loan-To-Value: 68% Term: 12 Months Loan Amount: $12,550,000 Hard Money Loan Funded on Two Hotel Properties in Laguna Beach, California LAGUNA BEACH, CA Loan Type: Refinance Property Type: Hospitality Loan-To-Value: 51% Term: 12 Months Loan Amount: $12,550,000

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By |February 1st, 2024|Categories: Hard Money Lending|
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