Your real estate portfolio contains more than just properties; it holds potential. The equity sitting in your assets is dormant capital that could be used to fuel your growth. A hard money cash-out refinance is the key to unlocking it. This financial tool lets you convert that equity into liquid cash, perfect for a down payment on a new rental or funding a fix-and-flip project. It’s a way to make your assets work harder for you. This guide covers everything you need to know, from the application process to finding the best hard money cash out refinance rates.
Key Takeaways
- Use hard money for speed, not for long-term savings: This type of loan is a strategic tool for seizing immediate opportunities. The higher interest rates are a trade-off for fast access to capital that can help you secure a deal before it’s gone.
- Showcase your property’s value and your exit plan: Hard money lenders focus on the asset and your strategy for repayment, not just your credit history. A strong appraisal and a clear plan to sell or refinance the property will help you secure the best terms.
- Analyze the full cost, not just the interest rate: To find the best deal, compare origination fees, closing costs, and potential prepayment penalties from multiple lenders. The loan with the lowest advertised rate isn’t always the most affordable option overall.
What Is a Hard Money Cash-Out Refinance?
Think of a hard money cash-out refinance as a financial tool that lets you turn your property’s equity into liquid cash. If you own a property and need capital to seize a new investment opportunity, cover renovation costs, or simply improve your cash flow, this is one way to get it. The process is pretty straightforward: you take out a new, larger loan that pays off your existing mortgage, and you get to pocket the difference in cash.
What sets a hard money cash-out refinance apart is the lender’s focus. Unlike traditional banks that heavily scrutinize your personal credit and income history, hard money lenders are primarily concerned with the value of the property itself—the “hard asset.” This asset-based approach means the approval process is often much faster and more flexible, which is a huge advantage for real estate investors who need to act quickly. When a great deal comes along, you don’t always have weeks to wait for a bank committee to approve your loan.
This type of financing is especially useful for short-term needs, acting as a bridge to get you from one project to the next. For example, you could use the cash from a refinance on a stabilized rental property to fund the down payment on a new fix-and-flip project. It’s a strategic way to leverage the assets you already own to continue growing your portfolio, all without the lengthy paperwork and strict requirements of conventional rental property financing.
What Are the Current Rates for a Hard Money Cash-Out Refi?
When you’re exploring a hard money cash-out refinance, it’s smart to have a clear idea of the current interest rates. Generally, you can expect rates for this type of loan to fall between 8.5% and 12%. This range reflects the unique nature of hard money, which prioritizes speed and asset value over the strict criteria of conventional banks.
This is part of the broader world of hard money lending, where overall rates can span from 7% to 15%. The rate for your specific cash-out refinance will land somewhere in that spectrum, influenced by the details of your deal. These figures are higher than what you’d see with a traditional mortgage, and that’s by design. You’re paying a premium for fast access to capital, flexible underwriting, and a lender who understands the urgency of real estate investment opportunities.
The trade-off for the higher rate is significant: you can get cash in hand in a matter of days, not the weeks or months it takes with a bank. This allows you to move quickly on a new acquisition or fund renovations without delay. The exact rate you secure will depend on factors like your property’s value, your investment history, and the lender you partner with. It’s also helpful to know that different loan structures, such as a second mortgage, may come with slightly different terms and rates.
The Top Hard Money Lenders for a Cash-Out Refinance
Finding the right lending partner is one of the most important steps in securing a hard money cash-out refinance. The best lender for you will depend on your specific project, financial history, and how quickly you need to close. Some lenders specialize in fix-and-flip projects, while others offer more flexibility for new construction or rental portfolios. Key factors to compare include interest rates, loan-to-value (LTV) ratios, funding speed, and credit score requirements.
Remember, the lender with the absolute lowest rate isn’t always the best choice if their terms are too rigid or their process is slow. You need a partner who understands your goals and can provide the capital you need on a timeline that works for your investment strategy. We’ve compiled a list of some of the top hard money lenders to help you start your search and find a great fit for your next project.
Asteris Lending
At Asteris Lending, we focus on building partnerships with real estate investors by offering a diverse range of financing solutions. Whether you need to pull equity from a rental property or fund your next fix-and-flip, our loan products are designed to fit your strategy. We provide flexible and reliable capital through our bridge loans, rental financing, and new construction programs. Our goal is to be more than just a lender; we act as a capital advisor to help you structure the right deal to achieve your investment goals, ensuring you have the support you need to succeed.
Kiavi
Kiavi is a well-known name in the hard money space, particularly for investors focused on fix-and-flip projects. They are recognized for offering competitive rates and terms, with interest often starting around 7.75%. Loan amounts typically range from $100,000 to $3 million, making them a solid choice for a wide variety of residential rehab projects. To qualify, you’ll generally need a credit score of at least 660. If you have a strong credit profile and are working on a standard flip, Kiavi is a great lender to consider.
RCN Capital
RCN Capital is a great option for investors across the experience spectrum, from those just starting out to seasoned professionals. They offer a broad range of loan products for different types of properties and projects. Their loan amounts start at $75,000 and go up to $3 million, with interest rates beginning around 9.24%. With a minimum credit score requirement of 650, they provide accessible financing for a variety of investors looking to execute a cash-out refinance for their next deal.
Lima One Capital
If your investment portfolio is diverse, Lima One Capital is a lender that can likely meet your needs. They cater to a wide array of investment plans, providing financing for rental properties, new construction, and multi-family homes in addition to fix-and-flips. This flexibility makes them an attractive partner for investors who aren’t just focused on one type of project. They have a more accessible minimum credit score of 600, which opens the door for more investors to secure the funding they need.
New Silver
For investors who need to move quickly, New Silver stands out with its technology-driven approach and fast approval process. They often provide instant online loan approvals, which can be a huge advantage in a competitive market. Their loans range from $100,000 to $5 million, with starting interest rates typically falling between 9.25% and 11.25%. You’ll need a credit score of at least 650 to qualify, but their streamlined process is ideal for investors who prioritize speed and efficiency.
Easy Street Capital
Easy Street Capital is another lender known for its incredibly fast funding options, helping investors close deals without delay. They offer loans starting at $75,000 and going up to over $5 million, with interest rates beginning around 8.90%. Their minimum credit score requirement is 600, making them an accessible option for many real estate investors. If your top priority is getting your cash quickly to seize an opportunity, Easy Street Capital is definitely a lender to put on your shortlist.
What Factors Influence Your Hard Money Refi Rate?
When you start shopping for a hard money cash-out refinance, you’ll quickly notice that rates can vary. Unlike conventional loans with standardized criteria, hard money lending is more nuanced. Lenders assess the total risk of a deal, and your interest rate reflects that assessment. Several key elements come into play, from the property itself to the broader market environment.
Understanding these factors is more than just an academic exercise—it’s your key to securing the best possible terms. By knowing what lenders are looking for, you can present your project in the strongest light and have a clear-eyed view of what to expect. The rate you’re offered is a direct result of how a lender weighs the strength of your collateral, your experience, and the economic landscape. Let’s break down the four main components that will shape your hard money refinance rate.
Your Property’s Value and LTV Ratio
The most critical factor in any hard money loan is the property itself. Lenders are primarily concerned with the asset they are lending against. They measure this with the loan-to-value (LTV) ratio, which compares the loan amount to the property’s current appraised value. For a hard money refinance, most lenders will cap the LTV at around 65% to 70%. This means if your property is worth $500,000, you can likely borrow up to $350,000. A lower LTV means you have more equity in the property, which reduces the lender’s risk and can often lead to a more favorable interest rate.
Your Credit and Financial History
One of the biggest draws of hard money lending is that your credit score isn’t the main event. Because the loan is secured by a hard asset (the property), lenders place far more weight on the property’s value than your personal credit history. This makes hard money a powerful tool for investors who may not qualify for traditional bank financing due to a recent business venture, a spotty credit past, or self-employment income that’s hard to document. While a strong financial background certainly helps and can influence your rate, a low credit score isn’t an automatic deal-breaker in the world of hard money.
Market Conditions and Property Location
Lenders don’t evaluate your property in a vacuum. They pay close attention to the real estate market where your property is located. In a strong, appreciating market, properties are easier to sell, which lowers the lender’s risk if they have to foreclose. This can translate into better rates and terms for you. Conversely, if a market is showing signs of slowing down, lenders may become more conservative, potentially leading to higher rates or lower LTVs. Your property’s location and the health of the local market are direct indicators of the investment’s stability.
Loan Size and Property Type
The specifics of your loan request also play a role. The total loan amount can influence the rate, as can the type of property you’re refinancing. Hard money loans are designed for investment properties, not your primary residence. Whether you’re refinancing a single-family rental, a multi-unit apartment building, or a commercial space will impact the terms. Lenders have different appetites for different types of projects, so a simple rental property financing deal may be priced differently than a more complex fix-and-flip project requiring a bridge loan.
Hard Money vs. Traditional Refinancing: How Do the Rates Compare?
When you’re looking to pull equity from a property, you’ll quickly notice a major difference between hard money and traditional financing: the interest rate. The two are structured for entirely different scenarios, and their rates reflect that.
Hard money loans come with higher interest rates, typically ranging from 8% to 15%. This isn’t because lenders are trying to be difficult; it’s a reflection of risk and speed. Hard money lenders are more concerned with the property’s value than your personal credit score, which allows them to fund deals incredibly quickly. That speed and flexibility come at a premium. These loans are also designed for the short haul, usually with terms of one to three years, making them ideal for projects where you plan to get in and out.
On the other side of the coin, a traditional cash-out refinance offers much lower rates. You’ll generally see current cash-out refinance rates sitting somewhere between 6.5% and 6.75%, though this can fluctuate with the market. It’s worth noting that these are usually a bit higher—about 0.25% to 0.50%—than a standard rate-and-term refinance because the lender is taking on more risk by giving you cash back. The loan terms are also completely different, stretching out for as long as 30 years, which results in a lower monthly payment.
The choice really comes down to your timeline and priorities. A hard money cash-out refi gives you fast access to capital with less focus on your personal financials, but you’ll pay a higher interest rate for that convenience. A traditional refinance saves you money on interest over the long run, but the approval process is slower and more rigorous.
The Pros and Cons of a Hard Money Cash-Out Refinance
A hard money cash-out refinance can be an incredibly useful tool for real estate investors, but it’s not the right fit for every situation. Like any financial product, it comes with a distinct set of advantages and disadvantages that you need to weigh carefully. The biggest draw is speed—you can tap into your property’s equity much faster than with a conventional loan, which is perfect for seizing time-sensitive opportunities like a property auction or a deal that just hit the market. This speed and flexibility, however, come at a cost, primarily in the form of higher interest rates and shorter loan terms.
Understanding both sides of the coin is essential before you commit. You’re essentially trading the lower rates and longer repayment periods of a traditional loan for quick access to capital. The approval process is also more streamlined because it focuses on the property’s after-repair value (ARV) rather than a deep dive into your personal credit history. This can be a game-changer for investors with less-than-perfect credit or complex financial situations. Let’s walk through the key pros and cons so you can weigh whether this type of financing aligns with your investment goals and your tolerance for risk.
Pro: Get Your Cash Fast and Flexibly
The number one reason investors turn to hard money is speed. When a new investment opportunity pops up and you need capital now, waiting 30 to 60 days for a traditional bank to approve a loan isn’t an option. Hard money lenders can often get money quickly into your hands, sometimes in as little as 7 to 10 days. This is because the underwriting process is focused on the asset—the property itself—rather than a deep dive into your personal financial history. This makes it a flexible solution for investors who may not qualify for conventional financing or who need to act fast to secure their next deal.
Con: Expect Higher Costs and Shorter Terms
This speed and convenience come at a premium. Hard money loans have significantly higher interest rates and fees compared to their traditional counterparts. You can generally expect interest rates to fall somewhere between 8% and 15%, plus origination points and other closing costs. The repayment terms are also much shorter, typically ranging from six months to a few years, not 15 or 30. This structure is designed for short-term projects, like a fix-and-flip, where you plan to pay off the loan quickly after renovating and selling the property. The higher cost is the price you pay for the lender taking on more risk and moving quickly.
Con: Know the Risks Before You Sign
Because hard money loans are secured by the property, the stakes are high. If you can’t make your payments or pay off the loan by the end of its term, you could lose the property to foreclosure. This is the lender’s primary way of recouping their investment. For this reason, you absolutely must have a solid exit strategy before you sign the loan documents. Whether you plan to sell the property, refinance into a long-term conventional loan, or pay it off with other funds, your plan needs to be realistic and well-researched. A hard money loan is a powerful tool, but it requires careful planning to use it successfully.
How to Get the Best Rate on Your Hard Money Cash-Out Refi
Securing the best possible rate on your hard money cash-out refi is about being prepared and strategic. While these loans are known for speed and flexibility, that doesn’t mean you have to accept the first offer that comes your way. A lower rate can save you thousands, freeing up capital for your next project. The key is to present yourself as a reliable borrower with a solid asset. By taking a few proactive steps, you can position yourself to receive more competitive offers and choose the one that truly aligns with your investment goals. Let’s walk through exactly how to do that.
Strengthen Your Application
Unlike traditional mortgages that focus heavily on your personal income and credit score, a hard money loan is all about the asset. The property itself serves as the primary collateral, so your application needs to showcase its value and potential. Start by getting a recent, professional appraisal to provide a clear, third-party valuation. You should also present a well-defined exit strategy. How will you repay the loan? Whether it’s through selling the property or refinancing into a long-term loan, lenders want to see a clear path forward. Having your documents organized—including your real estate portfolio, entity information, and a summary of the project—shows you’re a serious investor who understands the process.
Compare Offers from Multiple Lenders
It’s tempting to go with the first lender who says yes, especially when you need cash quickly. But shopping around is one of the most effective ways to get a better rate. You should always get quotes from several different hard money lenders to see how they stack up. Don’t just look at the interest rate. Compare the loan-to-value (LTV) ratio they’re offering, the origination points, closing costs, and any other fees. A lower interest rate might look great, but high upfront fees could make it a more expensive loan overall. Also, consider the lender’s reputation and communication style. Finding a true lending partner is just as important as finding a good rate.
Look for These Key Features and Terms
Before you sign any loan documents, you need to understand exactly what you’re agreeing to. Hard money loan terms can vary significantly between lenders, so read the fine print carefully. Key terms to focus on include the interest rate (is it fixed?), the loan-to-value (LTV) ratio, and the repayment schedule. Pay close attention to the fees, which can include origination points, processing fees, and appraisal costs. It’s also critical to ask about prepayment penalties. Some lenders charge a fee if you pay off the loan early, which could impact your exit strategy. Understanding these details will help you make an informed decision and avoid any surprises down the road when you explore options like bridge loans.
It’s Not Just the Interest Rate: Other Costs to Plan For
When you’re comparing hard money loans, the interest rate is usually the first number you look at. But to get a true picture of what you’ll pay, you need to look at the full range of fees. These additional costs can significantly affect your total loan expense and your project’s bottom line. Here’s a breakdown of the common fees to budget for.
Origination Fees and Closing Costs
Think of origination fees as the lender’s charge for creating and processing your loan. These are often bundled with other expenses into your total closing costs. Together, these fees typically range from 2% to 6% of the new loan amount. For example, on a $300,000 refinance, that could mean anywhere from $6,000 to $18,000 in upfront costs. It’s a wide range, which is why it’s so important to get a detailed fee sheet from any potential lender so you can compare offers accurately and avoid surprises.
Appraisal and Processing Fees
Before a lender gives you cash against your property, they need to confirm its value. That’s where the appraisal comes in. The appraisal fee pays for a professional assessment of your property’s current market worth. You’ll also see processing or underwriting fees, which cover the administrative work of verifying your documents and finalizing the loan. These appraisal and processing fees can add another 2% to 3% to the loan amount, so be sure to account for them in your financial planning for the project.
Prepayment Penalties and Other Potential Costs
A hard money loan is a short-term tool, but it’s still wise to check for prepayment penalties. Some lenders charge a fee if you pay off the loan ahead of schedule, which could impact your exit strategy. Also, consider how your financial profile affects costs. While many hard money lenders are flexible on credit scores—sometimes accepting scores as low as 620—a lower score or a complex deal might result in higher rates and fees. Always ask your lender for a clear explanation of all potential charges before you sign.
Common Myths About Hard Money Cash-Out Refinancing
Let’s clear the air. Hard money loans, especially cash-out refinances, get a bad rap sometimes. A lot of what you hear is based on outdated ideas or a simple misunderstanding of how they work. The truth is, for the right investor and the right situation, they are an incredibly powerful financial tool. Let’s walk through some of the most common myths and set the record straight.
Myth: Hard money is a last resort for desperate borrowers
This is probably the biggest misconception out there. The idea that you’d only turn to a hard money lender as a last resort is simply not true. In reality, many savvy investors use hard money for strategic investments, not because they’re in a tight spot. Think about it: when a great deal pops up, you don’t have weeks to wait for a traditional bank to approve your loan. Hard money provides the speed you need to jump on an opportunity, pull cash out of an existing property, and close the deal before someone else does. It’s a strategic move, not a desperate one.
Myth: The rates are just too expensive
Okay, let’s be direct: yes, the interest rates on hard money loans are typically higher than what you’d find at a conventional bank. But “expensive” is relative. You’re not just paying for the money; you’re paying for speed, flexibility, and an approval process based on the asset’s value, not just your personal finances. For short-term projects—like renovating a property before refinancing into a long-term rental loan—the higher rate can be a small price to pay for the profit you stand to make. The goal isn’t to hold this loan for 30 years; it’s to use it as a bridge to your next financial goal.
Myth: These loans are inherently risky
Any loan comes with risk if you don’t understand the terms. The perception of risk with hard money often comes from a misunderstanding of the agreement. A reputable lender will be transparent about rates, fees, and repayment schedules. The key to managing risk is having a solid plan and a clear exit strategy. Do you plan to sell the property? Refinance into a traditional mortgage? Knowing your exit before you enter the loan is crucial. When you do your homework and work with a trusted partner, you can confidently use these loans to your advantage.
Myth: You only get a hard money loan if you have bad credit
While it’s true that hard money lenders place more emphasis on the property’s value than your credit score, plenty of borrowers with excellent credit choose this route. Why? Again, it comes down to speed and flexibility. A traditional bank might not finance a property that needs significant repairs or see the value in a unique investment opportunity. Hard money lenders specialize in these scenarios. They can fund deals that don’t fit into the neat little boxes of conventional lending, making them a go-to choice for creative and ambitious investors, regardless of their credit history.
Is a Hard Money Cash-Out Refinance the Right Move for You?
Deciding whether a hard money cash-out refinance is the right choice involves looking beyond the interest rate and considering your overall investment strategy. These loans often carry a reputation for being a last resort for borrowers with poor credit, but that’s a narrow view. In reality, many seasoned investors use them strategically to capitalize on opportunities that require immediate funding. The real question to ask isn’t just “Can I get this loan?” but rather, “Will this loan’s speed and flexibility help me achieve a specific, time-sensitive goal?”
A cash-out refinance can be a powerful way to leverage your existing equity, but it’s not just for covering emergency expenses. For an investor, it’s a strategic financial tool that can unlock capital for property renovations, debt consolidation, or—most importantly—the down payment on your next acquisition. This is where hard money shines. While a traditional lender might take weeks or months to approve a loan, a hard money lender can provide funds in a matter of days, giving you the power to compete with cash buyers.
Of course, this speed comes at a price. Hard money loans typically have higher interest rates and fees compared to conventional financing. However, it’s crucial to weigh this cost against the potential return. In a competitive market, the ability to secure a valuable property quickly can far outweigh the higher cost of capital. The extra expense can be a worthwhile trade-off for an investment opportunity you might otherwise lose. Before moving forward, it’s essential to evaluate your financial situation, understand the purpose of the funds, and have a solid repayment plan that fits the shorter loan term.
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Frequently Asked Questions
How quickly can I actually get cash from a hard money refinance? While every deal is a bit different, the speed is what sets hard money apart. You can often have cash in hand within 7 to 14 days. This is a world away from the 30 to 60-day timeline you’d expect from a traditional bank. The process is streamlined because the lender is primarily focused on the value of your property, not a long paper trail of your personal income history.
Will a low credit score prevent me from getting a hard money loan? Not necessarily. One of the main advantages of hard money is that your credit score isn’t the main focus. Lenders are more interested in the property’s value and your plan for it. Because the property itself secures the loan, a less-than-perfect credit history is not an automatic disqualifier. A strong credit profile can certainly help you secure a better rate, but the deal’s strength is what truly matters.
When does a hard money cash-out refi make more sense than a traditional one? A hard money cash-out refinance is the right tool when speed is your top priority. It’s ideal for seizing a time-sensitive investment opportunity, like purchasing a property at auction or funding a fix-and-flip project that needs to start immediately. You’re essentially choosing to pay a higher interest rate in exchange for fast, flexible access to your equity, which can be the key to landing a profitable deal you’d otherwise miss.
What is an “exit strategy” and why is it so important? Your exit strategy is simply your plan for paying off the hard money loan. Since these loans have short terms, usually one to three years, the lender needs to know how you’ll settle the debt. Common strategies include selling the property after renovations or refinancing into a long-term, conventional mortgage once the property is stabilized. Having a clear and realistic exit strategy is crucial because it shows the lender you have a viable plan and protects you from the risk of default.
Besides the interest rate, what’s the biggest cost I should plan for? You should always budget for origination fees and closing costs. These fees cover the lender’s work in processing and funding your loan and can range from 2% to 6% of the total loan amount. On a sizable loan, this can be a significant expense. Always ask for a detailed breakdown of all fees upfront so you can accurately compare offers and understand the true cost of the loan beyond the monthly interest payment.
