What is a Hard Money Loan?
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans, starting at 10%, because of the higher risk and shorter duration of the loan.
Why use Hard Money Lending?
One of the reason many real estate investors come to hard money lenders is because these financiers understand the business of real estate investing more than traditional banks. This appreciation presents itself in their unusual criteria for loans. Instead of looking at standard measures like credit scores or income, they are much more concerned with the potential of the property and of the investor.
They also understand that many times real estate investors need more than just enough money to purchase a property- they need the means to rehab and get it ready to rent or sell. Many traditional banks are unwilling to facilitate this need.
Do you have pre-payment penalties?
There are no pre-payment penalties with the majority of our loan products.
Can I hold title in a corporation, LLC or Trust?
Yes; in fact, you can NOT hold title in your personal name. We do require personal guarantees from the entity’s principals.
What is Loan to Value (LTV)?
The Loan to Value (LTV) is the amount the lender will lend, based on the value of the subject property. For example, if a property is valued at $100,000 and a lender will lend 65% LTV, the loan amount will be $65,000. $100,000 X 65% = $65,000.
What is After-Repaired Value (ARV)?
The After-Repaired Value (ARV) is the value of the subject property after rehabilitation is completed. Typically, our purchase/rehab loans utilize the ARV to determine the max loan amount issued on a property that needs rehab.
How do you determine the value of the property?
All property valuations are determined by a licensed appraiser that is an expert in their respective property type and location. We only work with those that are experts in their field.
What if I have bad credit or a low score?
While traditional banks look at credit as a determining factor in your ability to be financed, many of our lenders do not use credit scores as a barrier to approval. However, some will look at your credit in order to identify an interest rate, and LTV; but credit will not eliminate your chances for your deal to be funded.
Can I live in the house during the course of the loan?
No. These loans are for investment purposes only!!
What if I have a foreclosure on my record?
Much like credit score issues, your foreclosure record alone will not dictate your application approval. If there is an active foreclosure, we may be limited on our ability to fund your project.
How do I pre-qualify for a loan?
Go to this link and submit your pre-qualification form