Insula Capital Group

Housing loan in bricks on the wooden table

When Should You Extend Your Hard Money Loan Plan?

Taking out a second mortgage doesn’t always have to mean extending your loan plan. For instance, replacing an existing 30-year mortgage plan with a ten-year plan before the halfway mark might mean substantially cutting down the overall interest per month you’re required to pay.

On the other hand, here’s when extending your private mortgage by replacing it with a new one might be a good idea.

When You’re Offered a Lower Interest Rate

If your credit has improved since the last time you took out a hard money mortgage, your odds of replacing it with a second mortgage with shorter terms and a lower interest are significantly higher.

See if there is another hard money lender out there willing to let you refinance at a rate lower than the one you pay now. Failing that, search for a shorter plan with the same rate so that you can save money on the same.

When You’ve Got Enough Equity in a Home

Between 2020 and 2021, home prices went up 16.2%, and so did the equity you’ve so far managed to build into your property. You can request a loan against this equity for a quick cash-out refinance, but only when it’s needed elsewhere.

For instance:

  • When you need quick cash for repaying a different debt with crippling terms.
  • For house repairs.
  • For a home renovation.
  • To cover the costs of a fix and flip.

Bonus Tip: Only refinance a property that can hold its own in a highly volatile market.

A Faceless Male in a Suit Holding out a Miniature Purple Home While Using a Calculator with the Other

When You’ve Got a Steady Source of Income

If you’re a freelancer, own a struggling business, or earn a similarly unpredictable living, you may not even qualify for a refinance hard money loan. Even if you do turn out to be eligible for a refinance, we suggest you stick to your existing mortgage.

However, if you have a white-collar job or own a successful business, you should totally take out a private loan against equity to make the most of an investment opportunity. Having a steady stream of income means you can make the payments month after month without fail.

When It’s Still Early Days

Previously, we mentioned refinancing before the halfway mark of your existing mortgage. There’s a reason we drew a line at this point. You see, extending your mortgage only makes sense when you’re getting an overall lower interest rate than the one you have now.

Thus, the earlier you take out a refinance loan, the lower your overall rate compared to the one you’re facing with your existing mortgage. So, always do your math before applying for this kind of loan to avoid paying more than you should.

Refinance with Hard Money Rental Loans Online

If you think it’s the right time for you to refinance, check out our hard money real estate loans, which are available to national and foreign investors at a maximum cash-out of 70%. We also offer fix and flip financing, construction loans and offer financing and refinancing opportunities for mixed-use properties.

Contact us to inquire about real estate financing and refinancing.