What is Hard Money?
A hard money loan is a collateral based loan against a hard asset – typically real estate – and is often referred to as private mortgage or private mortgage note. Unlike typical mortgage loans, hard money loans are provided by private sources (individuals and small lenders rather than large government or Wall Street backed sources). Hard money loans are often used if a person is having a difficult time getting approved for a conventional loan. The approval process for a hard money loan is usually much more streamlined than with a conventional loan because hard money lenders don’t have to follow strict institutional lending guidelines, and because they look mainly to the collateral as security for repayment rather than the borrower alone.
Hard money loans can be used for both commercial and residential properties and, since private lenders use their own money, they are able to create their own flexible lending terms that will meet both their and the borrower’s needs. Another advantage of hard money loans is that they are typically closed very quickly and with little documentation. Of course, since these loans are usually “outside of the box” and higher risk, the interest rates for hard money loans are usually higher then with a conventional loan.
If you are having difficulty obtaining conventional financing, or simply need a loan closed fast with creative and flexible terms, consider hard money.
Will My Deal Qualify For Hard Money?
Although here are many different types of hard money lending programs, the following can be used as general guidelines for determining whether your deal would be appropriate for a hard money lender. Even if your deal doesn’t match exactly to these guidelines, feel free to apply anyway. My hard money team will let you know if your deal makes sense for one of our many hard money lenders:
■ Loans are usually up to 65% Loan-to-value (LTV) based off the After-Repaired-Value (ARV);
■ 100% of acquisition/construction can be financed no problem;
■ Both residential and commercial properties are OK;
■ Low credit scores? No income? That’s OK too;
■ We welcome foreclosure/bank REO properties;
■ Interest only and “no payment” options are available;
■ All loans must be for business or investment purposes (sorry, no primary residences at this time);
■ We can handle cash-out refinances of land or existing structures;
If you have any questions about your deal or hard money in general, please feel free to contact me, or you may simply complete the application below and either me or my underwriting team will contact you.