Your hard money loan is maturing and the balloon is a date, not a feeling. Interest-only carry felt manageable in month three. In month eleven the rehab is unfinished, the buyer’s lender is slow, or the DSCR refinance is stuck on a rent schedule — and the note still comes due in full. This page is the payoff-side rescue: extension versus refinance, what a bridge loan balloon actually requires, and when an investment-property foreclosure bailout is still a fundable file.
Purchase-side failures — the other lender declined or disappeared before you closed — belong on the Second Look Desk. This guide is for loans you already closed that are running out of term.
When you are ready, submit a refinance scenario or submit the flip/bridge file with the current payoff and maturity date. Call (833) 264-7776 if the sale date is inside ten days.
What “maturity” and “balloon” mean on hard money
Most fix-and-flip and bridge loans at Jaken Finance Group are interest-only for 6–12 months (bridge can run 12–24 months) at 8.99%–13.5%. You pay interest on the funded balance. You do not amortize the principal. On the maturity date the remaining principal is due in one balloon payment, usually from:
- Sale proceeds on the flip
- A hard money to DSCR refinance
- A new bridge that takes out the old one
- An extension that pushes the same balloon later
The CFPB’s balloon-payment explainer is written for consumer mortgages. The mechanics are the same — a large principal due at the end — but your note is business-purpose on non-owner-occupied property. Consumer “ability to repay” theater does not save you. The asset and the exit do.
If you are fuzzy on the vocabulary, the hard money glossary defines balloon, extension, and LTC in lender English.
The clock: 90 / 60 / 30 / 14 days
Treat maturity like a construction inspection. Early is cheap. Late is a default letter.
| Days to maturity | What to do |
|---|---|
| 90+ | Confirm the exit. If sale or DSCR will not land, start a refinance or extension conversation now. |
| 60 | Order valuation, update scope remaining, get a written payoff. DSCR files need rent support — run the DSCR calculator. |
| 30 | You are in rescue. Pick extension or refinance. Do not shop six lenders for a week. |
| 14 or less | Send the package the same day. Title, insurance, payoff, photos, remaining budget. Inside a week, call. |
A 12-month interest-only note at 11% on a $220,000 funded balance costs about $2,017 per extra month. Two months of denial about the exit costs more than most extension fees.
Extension vs refinance vs sale vs default
These are four different products. Mixing them wastes the days you have left.
Extension
An extension is more term on the same loan: typically 30, 60, or 90 days, sometimes longer, with an extension fee and continued interest-only payments. Use it when:
- Rehab is days or a few weeks from complete
- The property is listed and you have showings, not a fantasy price
- The DSCR appraisal is scheduled and the ratio already pencils
- The current lender will actually extend (many national shops will not on a first ask)
Do not extend when the business plan changed — you decided to hold instead of sell, the ARV is gone, or you need a larger loan to finish the work. That is a refinance or a mid-construction refinance.
Refinance (takeout)
A maturity refinance pays off the existing balloon with a new loan. Common structures:
- DSCR rate-and-term — property is leased or can qualify on market rent; you want 30-year debt at 5.75%–10.5%. Leverage up to 85% rate-and-term in select markets for qualified borrowers. See DSCR cash-out and seasoning if you also need equity out.
- New bridge / hard money — rehab still in process, or the hold exit is not ready. New 6–12 month IO at 8.99%–13.5%.
- Listed-property bridge — you listed the flip and cannot delist for a conventional refi. That file is documented in refinance a listed fix-and-flip.
Refinance when you need a different lender, more time than an extension gives, more proceeds to finish work, or a permanent payment.
Sale
If the asset will sell inside the remaining term for enough to pay the balloon, selling is the cleanest takeout. Do not list at a pride ARV two weeks before maturity. Price to the payoff plus selling costs. Model those costs on the fix-and-flip calculator.
Default and foreclosure
If the balloon is unpaid, the lender can accelerate and start foreclosure under the security instrument. Process and timeline are state law. Illinois is judicial and slow; many deed-of-trust states move faster. That is not a strategy. It is the cost of pretending the date will move itself.
An investment-property foreclosure bailout is a refinance or bridge that pays the existing lender before the sale. It is not a consumer HARP-style rescue and it is not available on a house you live in. Jaken Finance Group finances non-owner-occupied investment property only.
Why balloons get stuck
The same five failures show up on almost every late file:
- Rehab calendar was a wish. Permits, weather, and change orders ate the 6-month term. You needed a 12-month note on day one. Read scope of work for borrowers.
- Exit was “we’ll figure it out.” Sale comps softened, or DSCR needs 1.0+ and the rent schedule does not support the loan you wanted. Sub-1.0 options exist on select files — DSCR below 1.0 — at lower leverage.
- You waited for the original lender to be nice. Some will extend. Many price the extension as a last resort and still want a new appraisal.
- Insurance or taxes lapsed. A refinance cannot close on a naked building. Fix coverage first.
- Title problems discovered at payoff. Open permits, municipal liens, ground rent (Baltimore), or a second lien you forgot. Title is not a closing-week task.
Purchase-side cousins of these problems — denial, lender ghosting — are hard money loan denied and lender backed out before closing. Different moment, same desk if the file is still a purchase.
Worked example: flip that ran long
Indianapolis ranch. Original hard money: $189,000 funded (90% of $148,000 purchase + $41,000 rehab) at 10.5% IO, 6-month term. Rehab hit knob-and-tube and a delayed permit. Month 5.5, two weeks of work left, no buyer. Payoff about $189,000 plus per diem.
| Path | What happens | When it fits |
|---|---|---|
| 60-day extension | Fee + continued IO (~$1,650/month) | Contractor can finish; list immediately |
| New 6-month bridge | New points, 8.99%–13.5%, 7–10 day close | Original lender will not extend; you need draws |
| Discounted sale | Net must clear payoff + 8% selling costs | ARV still there; you want out |
If as-completed value is still ~$232,000, a new bridge at 70% of that value can retire $189,000 and leave a little for finish work. If the real ARV is $205,000, you are negotiating a short payoff or bringing cash — not shopping rate. City context: Indianapolis hard money.
Worked example: BRRRR DSCR that missed seasoning
Gary two-flat. Rehab complete, both units leased, hard money maturing month 8. DSCR on in-place rent at 70% LTV clears 1.12. The first DSCR shop wanted six months of leases and a 1.25 ratio. You have 22 days.
Path: no-seasoning DSCR cash-out or a rate-and-term takeout that only needs to pay the balloon. If the ratio is the problem, lower the loan amount (bring cash or accept a smaller refi) or look at interest-only DSCR to cut the qualifying payment. Do not default a performing rental because one overlay wanted 1.25.
Gary and Northwest Indiana files: Gary hard money · Northwest Indiana BRRRR.
Worked example: commercial IO and the 2026 maturity wall
Small retail or mixed-use with a 3-year interest-only commercial note coming due is a cousin of the flip balloon, not the same product. Agency and CMBS takeout can fail when occupancy or rate shocked the DSCR. The CMBS maturity wall bridge guide covers that stack. Residential 2–4 unit balloons stay on DSCR or residential bridge. Five-plus units and mixed-use go to multifamily bridge or mixed-use bridge.
FHFA’s public data tools are useful context for the rate environment. They will not pay your balloon.
Foreclosure bailout — what we will and will not do
Will review: non-owner-occupied SFR, 2–4 unit, small multifamily, and select commercial where the existing lender will provide a payoff and there is enough value or a sale contract to retire our loan. Speed is 7–10 business days on complete files, not 48 hours unless the file is already underwritten.
Will not do: owner-occupied homestead rescue, “stop foreclosure” consumer loans, or files where the sale date is tomorrow and title has not been opened. Those ads are a different industry.
If the property is already set for a sheriff or trustee sale, read the state path — Illinois judicial foreclosure is not Missouri’s non-judicial auction timeline. Bring the notice, not a screenshot of a listing.
What to send for a maturity refinance
- Current promissory note, mortgage/deed of trust, and payoff letter with per diem
- Maturity date and whether you are already in default or forbearance
- Status: rehab % complete, remaining budget, or rent roll / leases
- Insurance binder and tax status
- Photos, permits, and contractor name if work remains
- Your preferred exit: sale listing, DSCR hold, or another flip
- How many days you actually have
Upload that on submit refinance or submit flip. If the original purchase financing is what failed and you never closed, use Second Look submit instead.
How Jaken Finance Group underwrites a payoff rescue
We underwrite the property and the exit, not a story about the last lender. Credit is flexible — no minimum FICO on select programs — but we may still pull credit to see trends. Leverage has to work today: remaining ARV or as-is value, cost to finish, and a balloon we can actually pay off. No appraisal on select programs for experienced sponsors with documented comps; most files still get a third-party valuation.
Rates stay in the published bands: hard money / bridge 8.99%–13.5% IO; DSCR takeout 5.75%–10.5%. We do not invent a “foreclosure special” rate off the card.
Nationwide coverage is 50 states on qualified non-owner-occupied property. Local wrinkles still matter — Chicago RLTO on a hold exit, DC TOPA, Baltimore ground rent, Florida insurance. Those belong in the file on day one.
Maturity rescue vs Second Look
| Situation | Where to go |
|---|---|
| You never closed; first lender declined or vanished | Second Look · financing fell through |
| You closed; balloon is coming due | This page · submit refinance |
| Rehab stalled mid-build, need more funds | Mid-construction refinance |
| Listed flip, need cash-out without delisting | Listed flip cash-out bridge |
| Commercial / CMBS due | CMBS maturity wall |
Same firm, different job. Do not send a maturing note to the purchase-rescue form and wait.
Payoff letters, per diem, and reconveyance
Ask the current lender for a payoff quote good through a stated date, with a per diem after that. Refinance closings slip. A quote that expires on Friday while title records Monday is how people wire short and scramble. Include:
- Principal, accrued interest, default interest if any
- Prepayment premium (some private notes have one; many hard money notes do not after a minimum-interest period)
- Escrow or repair-holdback remaining — you may want that holdback disbursed to finish work before payoff, or assigned with the new loan
- Recording fees to reconvey the mortgage or deed of trust
If draws remain in the old loan, finishing under the old lender then refinancing is often cleaner than asking a new lender to take over a messy draw schedule. If the old lender has frozen draws because you are near maturity, say that in the first email. Frozen draws plus a balloon is a mid-construction fact pattern even if you called it a flip.
Guarantees, default interest, and “friendly” forbearance
Most investor hard money is full recourse to the guarantor. A balloon default is not only a property problem. Read the note for default-rate step-ups — 18% or “lesser of X or maximum allowed” shows up in private paper. Forbearance letters should say whether the maturity date moved or whether the lender only agreed not to post the property this month. Those are different. Get it in writing from the servicer, not a text from a loan officer who left the company.
Cross-collateralized portfolio notes are worse: one asset’s balloon can drag a performing rental. Blanket and portfolio DSCR is the exit for a clean pool. It is not a magic wand if one property in the pool is a half-gutted row. You may need to split the collateral — pay off the problem asset first — then blanket the rest.
Worked example: extension fee vs new bridge points
Assume $240,000 payoff, 11% IO, 45 days to a realistic list-and-close.
- 60-day extension at 1 point = $2,400 plus ~$4,400 interest for two months ≈ $6,800
- New bridge at 2 points plus a week of overlap interest ≈ $4,800+ points and you restart a 6-month clock
If the house will actually sell in 45 days, the extension wins. If you still have a kitchen to install and no listing photos, buying a new 6-month clock is cheaper than stacking three “just 30 more days” extensions while default interest runs. Run carry on the fix-and-flip calculator. Offer discipline still starts with MAO — a maturity crisis does not raise ARV.
What “complete file” means when you have 11 days
Title opened, insurance binder that covers vacant or rehab status, payoff letter, photo set dated this week, remaining budget with contractor signature, entity docs, and a story that matches the photos. A dropbox of 2019 operating agreements and a Zillow estimate is not a complete file. We can often start without a full appraisal on select experienced-sponsor programs when comps are documented; we cannot start without a payoff and insurance.
If the current lender will not produce a payoff because you are in dispute, that is a legal problem. We need a number title can wire.
Related programs
- Bridge loans for investors
- What is a hard money loan?
- DSCR loans
- Interest rates and repayment
- Hard money vs conventional
- Loan process
Pre-qualify: what kind of loan do you need? · (833) 264-7776 · info@jakenfinancegroup.com
If you are comparing this rescue to a brand-new purchase, remember: a maturity refinance still needs an exit that a new lender believes. We will not take out a balloon so you can sit on an unfinished shell with no contractor. We will take out a balloon when the remaining work, the remaining term, and the remaining value line up. That is the whole product.
Rates, terms and conditions offered only to qualified borrowers and are subject to change without notice. Closing times are in business days after borrower conditions are satisfied. Residential investment products are non-owner-occupied only.