Refinancing Out of Hard Money Before Extension Fees Hit
Hard money is built to be temporary. Every month past your plan costs interest and often an extension fee. Here's how to time the exit.
Short answer
To exit a hard money or bridge loan cleanly, start the refinance 60 to 90 days before maturity: finish the work, get the property rented or listed, and gather documents early. Waiting until the last month risks extension fees and extra interest that can wipe out much of your margin.
Key points
- Start the refinance 60 to 90 days before maturity.
- Extensions often cost a fee plus more interest.
- A finished, rented property refinances fastest.
What a late exit costs
Short-term loans usually charge a fee to extend past maturity, on top of continued interest. On a large balance, a few months adds up fast.
Deal sheet: $400,000 hard money loan, three-month delay, illustrative
| Amount | |
|---|---|
| Extra interest, 11% for three months | $11,000 |
| Extension fee, 1% | $4,000 |
| Cost of the delay | $15,000 |
A 90-day exit plan
- 90 days out: confirm the rehab finish date and line up the long-term lender.
- 75 days out: finish the work, order the appraisal and start leasing; see from flip to rental.
- 60 days out: submit the complete refinance file; see refinance document checklist.
- 30 days out: clear conditions and schedule closing.
- Maturity: close the refinance and pay off the short-term loan.
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If you need more time
Ask about extension terms early, while you still have options, and compare the cost with refinancing into another short-term loan. Know the numbers before maturity, not after; see bridge loans for investors.
Frequently asked questions
When should I start refinancing out of a hard money loan?
Ideally 60 to 90 days before maturity, so the appraisal, leasing and underwriting have time to finish.
How much does a hard money extension cost?
Terms vary, but extensions commonly charge a fee, often around 1% of the balance, plus continued interest for the extra months.
Can I refinance a hard money loan into a DSCR loan?
Yes. Once the property is finished and rented, investors commonly refinance into a DSCR loan sized on its value and rent.
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