If you have a hard money loan, you’ve probably thought about refinancing. But how soon can you refinance a hard money loan? In a typical hard money situation, you’ll likely need anywhere from 3-12 months before you can refinance out of the loan. Is Hard Money Lending a good investment to begin with? Can you refinance immediately after closing? These are all questions that need answers if you want to make the best decision for your real estate profitability. This article will help answer these questions and more so that you know exactly what to do next.

When it comes to refinancing out of your hard money loan, it’s important to remember that it may not be as simple as refinancing a primary residence for example.

Important Factors to Consider When Refinancing Your Hard Money Loan

While it is definitely possible to refinance out of a hard money loan, there are several things to consider and know beforehand. Here are some important tips if you’re asking how soon can you refinance a hard money loan.

  1. Does your lender charge a prepayment penalty / guaranteed interest – If you have a lender that does charge a penalty, you need to know how it is calculated. Some lenders require a specific amount of interest to be paid regardless of how long you have the loan. Others may charge additional interest if you refinance early.
  2. Does your refinancing bank require a certain amount of time before lending on a property – Some banks require time to pass before they wiill appraise your property at the afterr repair value (ARV). If you’re flipping, you likely only owned the property for a few months. Banks will often require 6-12 months before accepting an appraisal at the new, higher value.
  3. Is there enough equity in the property to pay off your hard money loan with the refinance – This is something you should consider before getting the loan in the first place. You need to make sure your refinance will actually cover the loan amount after all expenses. Don’t forget to consider costs like loan fees, repairs, utilities, interest and more.

Recommended Reading: Hard Money Loan FAQs

In Conclusion – How Soon Can You Refinance a Hard Money Loan?

Most lenders do not have a minimum timeframe you’re allowed to refinance. In other words, you could technically refinance right away in many cases. However, you need to consider the costs involved and if your new lender will allow the increase in value.

Hopefully this article answers all of your questions about how soon you can refinance out of a hard money loan.