Extending vs. Refinancing Your Hard Money Loan

Also referred to as a bridge loan or a fix-and-flip loan, hard money loans are essential for short-term real estate projects. Whether an individual or business is seeking to establish an effective fix-and-flip business, they will need to understand how to deal with their loans as they mature. Most hard money lenders tend to focus on short periods of time per loan, creating issues down the line if the receiver cannot fully repay their loan.

When dealing with a maturing hard money loan, it becomes important to understand your options. Today, we are going to highlight the age-old question: should you extend or refinance a hard money loan?

Pros & Cons: Extending a Hard Money Loan

Extending a hard money loan is often the easiest way to get the ball rolling with your debt. A hard money loan gets quicker approval thanks to the pre-existing relationship between the lender and their client. Additionally, extending a hard money loan is typically done after creating a steady and positive payment history between both parties.

Benefits of Extending a Loan

-Based on Established Relationship
-Quick Approval Process
-Positive Repayment History

Even though extending a hard money loan can be a frictionless approach, there are downsides to this effort. The primary reason fix-and-flip investors may want to avoid extending a loan is that the extension likely won’t be long enough to tackle the entirety of the debt. This creates a problem pertaining to timelines, so it is imperative to have a plan in place before extending your loan.

Negatives of Extending a Loan

-Short Term Extensions 
-Harder to Cover

Pros & Cons: Refinancing a Hard Money Loan

On the other side of the coin, investors may want to consider refinancing the entirety of their hard money loan. Working with groups like Hard Money Lenders AZ, clients can acquire a better interest rate while pursuing more convenient cash-out opportunities. Refinancing a new hard money loan will allow you to also bypass any extension fees that you might have struggled paying. Finally, refinancing a loan may lead you to better terms, particularly if your credit and cash flow has changed.

Benefits of Refinancing a Loan

-Get Better Interest Rates
-Avoid Paying Extension Fees
-Convenient Cash Out Options

Refinancing a loan helps in many situations, but that isn’t always going to be the case. When refinancing a hard money loan, you will have to work with a lender to complete an entirely new underwrite. You will also have to find an entirely new hard money lender, a process that can create some frustration and tension as you navigate the many options available to you.

Negatives of Refinancing a Loan

-Complete New Underwrite
-Find New Hard Money Lender
-Negotiate Completely New Terms

Contact Hard Money Lenders AZ!

When the time comes to refinance your hard money loan, make sure the team at Hard Money Lenders AZ is on the job. As the top-rated Hard Money Lender on Google for the state of Arizona, clients have enjoyed fast funding, proven results, and effective communication through a team of industry-leading specialists.

Contact Hard Money Lenders AZ today to see if you are approved!