You’ve found an ideal property. It could be a home or houses for rental investment. The deal is sweet and now you want a hard money loan for renovation.

One of the advantages of hard money loans is that they are executed fast. Your property will be funded even with no money down. That means you can complete the renovation and put the rentals in the market or occupy the home.

This sounds great; only one step ahead. You would like the temporary hard money loan refinanced to permanent financing.

Hard money loans for real estate investors are more likely to hurt the revenue from the property. So it’s wise to refinance the loan.

Rates for conventional loans are a bit lower. How do you go about hard money loan refinancing? What options do you have?

Cash-Out Refinance

Is your deadline for a balloon payment for the hard money loan fast approaching? Cash-out refinance would be a great alternative.

This is the process of refinancing the existing mortgage. The new mortgage carries a higher amount than the current one. So, you need a loan equivalent to the difference between the two.

Since you are borrowing more than what you currently owe, the lender offers cash which you can use for just about anything.

Cash-out refinancing offers significant funds at attractive interest rates. If you are short of cash but your home has equity, it gives you a pool of money to make home improvements.

Your real estate project is treated uniquely. Be sure to understand if it qualifies for a cash-out refinance. Contact your lender and get the facts right.

Fixed Mortgage

So you took a hard money loan to retain a piece of real estate or buy a new one. Getting a fixed mortgage would be a better idea. If your existing home is close to foreclosure, you cannot qualify a conventional mortgage refinance.

If that’s your current situation, a fixed mortgage can give you a long-term solution at a lower but fixed rate. Shop around to see if your credit can secure a good deal to pay off your hard money loan.

Home Equity Loan

If you took hard money cash for reasons other than buying a home, you can repay it with a home equity loan. It works only if your home has equity. You also need sufficient credit.  

Often, people who obtain hard money loans do not qualify home equity loans. After some years, they get approved and refinance their hard money loans. The best thing about a home equity loan is low interest and a fixed payment routine.

Subprime Lending

Subprime lenders work hand in hand with traditional banks. They give cash to people who don’t qualify for typical loans. When your credit is poor, your bank may refer you to a subprime lender.

You might get an adjustable-rate mortgage or interest-only mortgage. This gives you a long term solution but at a higher interest rate.


Hard money loans save people during tough economic times. They offer a temporary fix so you might need to refinance at some point. If you are still wondering how to refinance a hard money loan, sit down with your lender to determine the end strategy.

You don’t want to be stuck with a temporary loan. Fret not because the above 4 options can refinance hard money to a conventional loan.

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