Refinancing with Private Money
Refinancing with Private Money: Fast, Flexible Loans Built for Real Estate Investors
Private-money refinancing is an asset-first strategy that lets investors turn property equity into quick capital, focusing on collateral and a clear exit rather than traditional credit paperwork. This guide walks through how private and hard-money refinances work, when investors choose cash-out or DSCR options, and when bridge or bailout financing is the practical choice for time-sensitive deals. Many owners face tight deadlines or complicated income documentation — private lenders underwrite to property value, ARV, and a credible exit plan to offer a realistic alternative. You’ll get the simple mechanics (apply → underwrite → fund), the tangible benefits (speed, flexibility, equity-driven underwriting), and step-by-step checklists for qualifying, calculating LTV/ARV, and preparing foreclosure‑bailout submissions. We also cover common loan types, typical terms and fees, DSCR math, and exact documentation so you can decide whether a private-money refinance fits your portfolio. Throughout, we note how Fidelity Funding’s fast programs map to these options so you can move forward with clarity.
What Are Private Money Refinance Loans and How Do They Work?
Private-money refinance loans are short- to medium-term, real-estate-secured loans that unlock equity and let investors reposition assets quickly. Underwriting focuses on the collateral and the exit plan — appraisal or ARV, lien position, and projected repayment (sale, refinance, or cash-out) — rather than strictly on borrower income. The process is direct: submit a deal package, the lender assesses value and equity, underwriting confirms collateral and exit, and funding follows title and payoff verification. Because these loans rely more on property metrics than FICO or tax returns, they’re a practical fit for flippers, portfolio investors, and owners with time-sensitive opportunities. The next section breaks down investor use cases in more detail.
What Is a Hard Money Refinance Loan for Investors?
A hard-money refinance loan is a private, asset-backed loan investors use to pull equity, bridge to a sale, or exit a rehab. These loans are structured around property value and a documented exit strategy. Investors rely on hard-money refis to free up cash for new purchases, pay down expensive debt, or stabilize positions while arranging longer-term financing. Underwriting centers on LTV or ARV, borrower experience, exit clarity, and property condition — factors that determine advance rates and pricing. When paperwork is ready, approval and closing timelines are fast, which is why hard money is common for auctions and rehab turnarounds. For example: a $400,000 property at 70% LTV could produce up to $280,000 in new financing to support reinvestment or debt consolidation, setting up a comparison with bank refinancing.
How Does Refinancing with Private Money Differ from Traditional Bank Loans?
Private-money refinances differ from bank refinances mainly in underwriting focus, speed, documentation, and flexibility. Banks emphasize credit scores, tax returns, and DTI, which can delay closings and exclude borrowers with nonstandard income. Private lenders evaluate collateral value, ARV, and a clear exit instead, so decisions are driven by the property and the plan for repayment. That flexibility usually comes with higher rates and fees but offers turnarounds measured in days instead of weeks — ideal for distressed properties, flips, or short-term portfolio moves. When choosing between the two, balance the need for speed and flexibility against long-term cost: use private money for urgent or nonstandard deals and pursue conventional refinance when lower long-term rates are the priority. The next section highlights the investor benefits that make private refinance useful.
What Are the Key Benefits of Refinancing Investment Property with Private Money?
Private-money refinance delivers three practical benefits for active investors: speed, underwriting flexibility, and strategic access to equity. Faster approvals reduce exposure to market shifts or foreclosure timelines by shortening the application-to-close window. Equity-focused underwriting lets investors with complex incomes or lower credit access capital. Flexible structures — interest-only payments, short terms, or bridge financing — can be aligned to your exit plan, and equity access funds new acquisitions, rehab budgets, or portfolio rebalancing. These advantages translate into concrete outcomes: quicker rehab starts, preserved acquisition windows, and targeted bailouts when defaults threaten. Below is a compact list of core benefits and how they influence investor decisions.
Private money refinance offers these core advantages:
- Rapid, reliable funding for time-sensitive deals and auctions.
- Underwriting driven by property equity and ARV rather than traditional income documentation.
- Flexible structures (interest-only options, short-to-medium terms) that align with planned exits.
These advantages lead naturally to timelines and document readiness — the factors that determine whether you can hit accelerated close windows.
How Does Fast Approval and Funding Support Time-Sensitive Deals?
Fast approval and funding help time-sensitive deals by compressing the application-to-close workflow: focused underwriting, prioritized title work, and streamlined valuations. A rapid workflow typically starts with a brief deal summary and proof of ownership, followed by an expedited valuation and payoff demand that let the lender finalize an asset-based offer. With key documents — current mortgage statements, insurance, and an exit plan — prepared in advance, approvals can happen within 24 hours and closings often in 5–7 days, depending on title and appraisal timing. Common friction points are title issues, appraisal delays, and slow borrower responses; clearing these in advance improves the odds of hitting fast timelines. Prepare the documents below to move quickly.
Essential documents to prepare for fast closings:
- Current mortgage statement and servicer payoff information.
- Proof of ownership (deed), insurance declarations, and property income statements if applicable.
- A concise exit plan outlining sale, refinance, or rental conversion with estimated timing and costs.
Being organized up front reduces delays and helps determine whether private refinance is the right path given your credit and income profile.
Can Private Money Refinance Loans Help Borrowers with Bad Credit?
Yes. Private-money refinance can work for borrowers with lower credit because underwriting emphasizes collateral and the exit plan over personal credit. Lenders focus on property value, ARV, and the borrower’s demonstrated ability to execute the exit (a flip track record, realistic rehab budget, or committed buyer). Alternative documentation — P&L statements, bank statements, rent rolls, or proof of assets — often substitutes for traditional tax returns. Expect higher rates or larger down payments in exchange for this flexibility; present a clear, realistic exit strategy to improve terms. Knowing the trade-offs helps you package deals for private underwriting.
What Types of Private Money Refinance Loans Are Available for Real Estate Investors?
Private lenders offer a range of refinance products for different investor needs: cash-out refinance, fix & flip refinance, bridge loans, seconds, commercial hard money, DSCR refinance, and P&L-based approvals for self-employed borrowers. Each product matches a use case — cash-out for portfolio liquidity, fix & flip for rehab projects, bridge loans for timing gaps, and DSCR for income-producing properties — so aligning loan type with strategy is essential. The table below summarizes core loan types by use case, typical LTV/ARV, term, and funding speed to help you identify the right fit.
Intro to loan comparison table: This table summarizes common private-money refinance programs and how they map to investor use cases.
| Loan Type | Typical Use Case | LTV/ARV | Typical Term | Funding Speed |
|---|---|---|---|---|
| Cash-Out Refinance | Pull equity for new investments or debt paydown | Up to 70% (75% case-by-case) | 12–60 months | 5–7 days |
| Fix & Flip Refinance | Pre- or post‑rehab financing based on ARV | Up to 90% ARV (fix & flip) | 6–24 months | 5–7 days |
| Bridge Loan | Short-term gap financing pending sale or refinance | 60–70% LTV | 3–18 months | As fast as 24 hours |
| DSCR Refinance | Income-based refinance for rentals | Depends on NOI/DSCR | 12–60 months | Variable (fast with docs) |
Each program performs best when paired with a clear exit plan and the right documentation.
Summary insight: Choosing the right private refinance product depends on your liquidity needs, the property’s value or ARV, and your planned exit. Understanding those axes reduces surprises. Fidelity Funding’s programs — Cash-Out, Fix & Flip, Bridge, DSCR, and P&L-based approvals — map directly to these categories; contact Fidelity Funding to review program fit and next steps.
How Does a Cash-Out Refinance with Private Money Work?
A cash-out refinance replaces an existing mortgage with a new private loan secured by the property and pays out the difference based on current value or ARV. The lender orders a valuation, sets the allowable LTV, pays off existing liens, and disburses proceeds at closing, securing the loan with a new mortgage or deed of trust. Typical first-position LTVs reach about 70% (75% on a case-by-case basis), so cash available depends on value and current payoffs. Required documents usually include title, mortgage statements, an appraisal or BPO, insurance, and a concise exit plan showing sale, refinance, or rental conversion. The next section covers rehab-specific refinance mechanics.
What Is a Fix and Flip Refinance Loan and When Should Investors Use It?
A fix-and-flip refinance supports purchase-plus-rehab or post-rehab strategies by advancing funds based on after-repair value (ARV) and rehab budgets. Lenders may advance a high percentage of purchase plus rehab in purchase-plus-rehab deals, while post-rehab refis use ARV to calculate a payoff or cash-out. Some programs fund up to 90% ARV. Use a fix-and-flip refinance when projected sale proceeds or post-conversion rental income justify the rehab costs and the timeline fits short-term loan terms. Documentation should include contractor bids, a rehab budget, a schedule, and post-rehab valuation assumptions. The exit — sale or conversion to a long-term loan — drives underwriting and repayment planning.
What Are the Qualification Requirements and Loan Terms for Private Money Refinance?
Qualification centers on measurable underwriting factors — LTV/ARV, collateral quality, DSCR where applicable, and a credible exit plan — rather than borrower credit alone. Lenders review property condition, location, marketability, and comparables to set advance rates and pricing, and they weigh borrower experience and exit clarity in risk decisions. Below is a concise table of typical underwriting attributes, ranges, and required documents so you know what to prepare before submitting a deal.
Intro to underwriting expectations: Use this table to set realistic expectations for LTV, rates, and paperwork needed for private refinance underwriting.
| Attribute | Typical Range (First Position) | Typical Range (Second Position) | Documents Required |
|---|---|---|---|
| LTV / ARV | Up to 70% (75% case-by-case) | 50–65% depending on senior lien | Title, mortgage statements, appraisal |
| Loan Term | 12–60 months | 12–36 months | Loan application, exit plan, P&L if applicable |
| Interest Rates | Starting at 6.99% interest-only (programs vary) | Higher for subordinate positions | Proof of insurance, rent roll, bank statements |
| Fees (Origination/Points) | Varies; typically charged at close | Additional costs possible | Appraisal, title, underwriting fee documents |
Summary of underwriting table: Match expected LTV and term to your exit and assemble required documents to minimize friction. Fidelity Funding’s program ranges align with these figures — lending up to roughly 70% LTV (75% case-by-case), fix & flip programs up to 90% ARV, terms of 12–60 months, and rates starting at 6.99% interest-only — so use these ranges when planning a submission.
What Loan-to-Value Ratios and Property Types Are Eligible?
Typical LTVs and eligible property types vary by product but commonly include single-family residences, multifamily units, small commercial properties, land with development plans, and distressed assets that may not qualify for conventional financing. First-position LTVs commonly reach up to 70% (75% in select cases for strong collateral and borrower experience); fix & flip ARV loans may reach 90% ARV for rehab projects. Property condition, location, and comparables materially affect valuation and allowable LTV; lenders apply conservative discounts to distressed or nonstandard assets. Clear photos, a scope of work, and comparable sales help reduce valuation uncertainty and speed underwriting.
What Interest Rates, Loan Terms, and Fees Should Borrowers Expect?
Interest rates, terms, and fees depend on lender policy, collateral quality, and lien position. Sample ranges start at 6.99% interest-only for certain programs and increase for higher-risk or subordinate positions. Terms typically run 12–60 months and often feature interest-only payments with a balloon at term, letting borrowers align repayment with an exit. Origination fees and points are common at close; additional costs may include appraisal, title, and underwriting fees. Drivers of variance include LTV, property type, borrower experience, and loan position — understanding these helps forecast total cost and sequence exits effectively.
How Can Private Money Refinance Help Prevent Foreclosure and Support Bailout Solutions?
Foreclosure bailout loans from private lenders provide urgent, short-term funding to cure defaults, pay arrears, or buy time for a planned exit. These loans rely on rapid valuation and payoff coordination to stop trustee or sheriff sales. The process emphasizes speed — document collection, title pull, payoff demand, and expedited underwriting — so funds can reinstate a loan or clear junior liens. Bailout financing preserves ownership and creates breathing room for resale, refinance, or recapitalization. The subsection below outlines an operational timeline and a practical checklist for urgent bailout submissions.
Short intro to bailout process checklist: The numbered steps below outline how borrowers, counsel, and lenders typically coordinate under urgent timelines.
- Obtain current payoff demands and confirm trustee sale dates.
- Provide proof of ownership, insurance, and any existing loan documents.
- Submit a concise deal package with valuation evidence and a clear exit plan.
Summary: Acting quickly and coordinating title and payoff details is essential to secure fast bailout funding; timelines and documentation clarity determine whether a lender can meet urgent deadlines.
What Is the Foreclosure Bailout Refinance Process with Private Money?
The foreclosure bailout refinance starts with immediate fact‑gathering: confirm the trustee sale date, get payoff demands, and provide proof of ownership and insurance so a lender can estimate funds and timing. The lender then orders a rapid valuation and title check, underwrites to equity and exit, and issues a conditional payoff offer. Once accepted and title work clears, funds disburse to reinstate or pay off liens, stopping the foreclosure sale. Timelines are compressed — approvals can be as fast as 24 hours and closings often within 5–7 days when documents and title are clear — but title defects or slow payoff responses can extend the window. Present a concise exit plan (sale, refinance, or recap) and prioritize immediate access to documents to improve the chance of meeting foreclosure deadlines.
How Do Foreclosure Bailout Loans Protect Property Owners?
Foreclosure bailout loans protect owners by providing immediate capital to cure defaults, reinstate loans, or pay off foreclosing liens — preserving ownership and time to execute an exit strategy. After funding, owners can pursue options such as a short-term payoff while arranging a sale, transitioning to a longer-term refinance, or recapitalizing and stabilizing rental income. Each path has costs and credit implications, so pair a bailout with a realistic plan to resolve the underlying stress. Bailouts stop imminent loss but often carry higher rates and fees; understanding those trade-offs helps owners choose the best preservation strategy.
In urgent situations, Fidelity Funding offers a streamlined bailout process with fast approvals (as fast as 24 hours) and closings often within 5–7 days. Borrowers with imminent trustee sale dates should assemble payoff demands and contact the lender immediately to explore options.
What Are DSCR Loan Refinance Options and How Do They Benefit Real Estate Investors?
DSCR refinance options underwrite to property income — net operating income divided by debt service — allowing investors, particularly those with rental portfolios or nontraditional personal income, to refinance based on cash flow rather than tax returns. A stronger DSCR shows a better ability to cover debt service and typically results in more favorable terms. DSCR refis help investors scale portfolios or optimize rates when properties generate sufficient NOI. The table below breaks down common DSCR metrics, thresholds, and use cases so you can calculate qualification clearly.
Intro to DSCR metrics table: Use this table to understand common DSCR thresholds and examples used in underwriting.
| DSCR Metric | Qualification Threshold | Calculation Example | Use Case |
|---|---|---|---|
| Minimum DSCR | 1.15–1.25 (varies by lender) | NOI $15,000 / Annual Debt Service $12,000 = 1.25 | Refinance for rate/term on rent-stabilized asset |
| Strong DSCR | 1.30+ | NOI $20,000 / Debt Service $12,000 = 1.67 | Scale portfolio with financeable cash flow |
| Marginal DSCR | <1.15 | NOI $10,000 / Debt Service $12,000 = 0.83 | May need higher interest or additional collateral |
Summary: Calculating DSCR objectively clarifies eligibility. Investors with strong NOI can use DSCR refis to access capital even with unconventional personal income documentation. Fidelity Funding’s DSCR programs align with these underwriting concepts — contact our team to match thresholds to specific rental properties.
What Are the DSCR Loan Qualification Criteria?
DSCR qualification focuses on verifiable property income, allowable expense treatment, and reliable documentation such as leases, rent rolls, and operating statements. Lenders calculate NOI and compare it to annual debt service to determine the DSCR ratio. Typical documentation includes signed leases, 6–12 months of rent collection evidence, a rent roll, and operating expense records; some lenders accept management statements or verified P&Ls for nontraditional portfolios. Assumptions like vacancy rates, reserves, and expense treatment materially affect DSCR — be explicit about your assumptions when submitting underwriting materials. A consistent NOI history and conservative expense assumptions improve your odds of meeting minimum thresholds and securing favorable terms.
How Does DSCR Refinance Compare to Traditional Refinancing?
DSCR refinance prioritizes property cash flow over borrower income and credit, enabling financing for investors whose personal paperwork would otherwise limit conventional approvals. Pros include access for self-employed investors, easier portfolio scaling, and a direct link between property performance and financing capacity; cons can include higher rates and shorter terms versus prime conventional loans. DSCR refis suit situations where portfolio cash flow outperforms personal income documents; traditional refinance remains preferable when borrowers seek lower long-term rates and terms based on strong credit and tax returns. Plan exits to convert short-term DSCR financing into longer-term loans when markets and borrower documentation allow.
When you’re ready to pursue these programs, Fidelity Funding helps review deal materials and clarify program fit — gather valuation, payoff demands, leases, and an exit plan to discuss DSCR or other options with our team.
For investors and owners ready to act: collect payoff statements, a concise exit plan, proof of ownership, and any rent or income documentation, then submit a deal package to Fidelity Funding or contact their team to discuss program fit. Fidelity Funding emphasizes fast approvals (as fast as 24 hours) and closings often within 5–7 days for eligible cases.
Frequently Asked Questions
What is the typical timeline for closing a private money refinance loan?
Closings on private-money refinances can be very fast — often 5 to 7 days. Streamlined underwriting and prioritized valuation work let lenders approve loans within 24 hours once documentation is submitted. Closing speed still depends on title clarity, borrower responsiveness, and appraisal timing.
Are there specific property types that are not eligible for private money refinance?
Private-money lenders are flexible, but some property types may be ineligible. Preferred properties typically include single-family homes, multifamily units, and small commercial assets. Severely distressed properties, nonmarketable assets, contrary‑zoning properties, or raw land without clear development plans can be excluded. Always check with your lender for property‑type guidelines.
What documentation is required for a private money refinance application?
Key documents usually include proof of ownership (deed), current mortgage statements, insurance declarations, and a clear exit plan describing how you’ll repay the loan. Lenders often request appraisals or BPOs, property income statements, and any supporting financials (rent rolls, P&Ls, bank statements) that demonstrate your ability to execute the exit. Having these ready speeds approval.
How do private money lenders assess the value of a property?
Lenders rely on appraisals or broker price opinions (BPOs) and focus on current market value and ARV when applicable. They consider condition, location, and comparable sales. Private lenders put more weight on property equity and exit strategy than on borrower credit scores, enabling flexible evaluations tailored to investor deals.
What are the potential risks associated with private money refinancing?
Private-money refinancing delivers speed but comes with trade-offs: higher interest rates and fees than conventional loans, and greater exposure if property values fall. If an exit strategy fails, borrowers risk repayment challenges and potential foreclosure. Use bailouts and bridge financing tactically and always have a realistic exit plan.
Can private money refinance loans be used for investment properties?
Yes. Private-money refis are well suited for investment properties — investors use them to access equity for acquisitions, fund renovations, or stabilize portfolios. Flexible underwriting that focuses on property value rather than personal tax returns makes private refinance a practical tool for growth-minded investors.
Conclusion
Private-money refinancing gives investors fast access to capital and the flexibility to act on time-sensitive opportunities. By focusing on equity, ARV, and a clear exit, these programs support rehabs, acquisitions, bailouts, and portfolio moves when conventional financing isn’t practical. Understand the options, assemble the right documents, and match the loan type to your exit plan. To discuss tailored refinancing solutions, connect with Fidelity Funding and we’ll help you evaluate the best path forward.
