A cash-out refinancing is a mortgaging transaction where the value of new mortgage amount is higher than the existing mortgage amount. Borrowers receive the difference in both amounts in cash and use it for other investment purpose, home projects or additional purchases. A person is eligible for cash-out hard loan if they own a property with low loan or no loan against it.
How do I figure out if hard money cash-out would work for me?
- Do you have an ‘exit strategy’? Though this is a beneficial option for financing before going ahead with hard money cash-out, you need to have a solid plan to use the money received for investment and to repay the loan.
- Does short-term loan suffice your needs? Usually, hard money lasts between 6 months to 1.5 years. Evaluate your needs and see if the loan would work for your situation.
- Required credit value: You are required to possess satisfactory credit score to obtain hard money loan.
If you want to know more about what is a cash-out refinance hard money loan, seek help from Capital Fund I. Their hard money lenders would assess your situation and let you know if taking a cash-out refinance hard money loan will benefit your situation. A hard money lender offers loans on the basis of your collateral and not the creditworthiness of the borrower.
Borrowers who don’t have sufficient credit can obtain a short-term hard money loan for about one to two years. To select the right hard money lender:
- Make a list of reliable hard money lenders: Shortlist few hard money lenders in your area. You can ask for referrals from traditional lenders or seek information online.
- Investigate each of them: The loan application process, loan and fees terms vary depending on the lender. There are many unscrupulous lenders in the market lending hard money. Before initiating any transaction, check their reputation.
- Prepare loan documentation: You boost your chances of obtaining loan if you have sufficient equity in your house. Collect proof of the value of your house and loan documentation for other outstanding loans.
- Apply for the loan: Call the finalized lender’s office and initiate the application process. Generally, the money lenders process the loan quickly and you’ll receive the cash in a week’s time.
- Strive to obtain long-term financing: The hard money received is just a short-term bridge loan. The interest rate gets high if you prolong the loan period to more than 1 or 2 years. Work towards sorting out the issues that prevented you from obtaining traditional refinancing.
Do a thorough research and find a reputed hard money lender. The right lender makes the process smoother for you.