How to refinance out of hard money

Hard money is a clock, not a mortgage. Rates are high, terms run 6 to 18 months, and extension fees stack fast. The exit is a DSCR refinance that pays off the note and locks the property into long-term financing underwritten on rent.

Start 60 days out

1. Pull your payoff statement and note the maturity date and extension terms
2. Assemble the rehab file: scope, invoices, permits, before-and-after photos
3. Get the unit leased if at all possible — a signed lease is the strongest input
4. Get a real insurance quote at the post-rehab value
5. Run DSCR at the new value with realistic taxes; test interest-only
6. Submit and order the appraisal with a 1007 rent schedule

Seasoning: the question everyone asks

Many DSCR programs allow a refinance at the new appraised value with little or no seasoning after documented renovation work. That's what makes the R in BRRRR possible. Your receipts and photos are what justify the value jump to an underwriter — keep them organized from day one of the project.

Where these files die

• The appraisal comes in below the after-repair value you assumed
• Work was done without permits that the jurisdiction required
• Title problems left over from a fast, distressed purchase
• Taxes get reassessed post-rehab and crush the DSCR
• The borrower starts 15 days before maturity instead of 60

If the appraisal disappoints, you may have to bring cash to retire the bridge. Know that risk before the hard money clock runs out, not after.

Cash out at the same time?

Sometimes. If the new value supports it, you can pay off the bridge and still walk with proceeds. When coverage or value is tight, prioritize the payoff and structure the rest as rate-and-term — you can always revisit cash-out after a year of seasoned rent.

Keep reading

• What is a DSCR loan?
• DSCR cash-out vs. a HELOC on a rental
• DSCR requirements checklist