Get All Of Your Hard Money Questions Answered Here.

There are key differences between hard money loans and conventional loans. When a buyer, borrower or investor wants to consider a hard money loan, it is important to understand these differences. Not all hard money lenders are the exact same. In fact, because hard money comes from so many different sources, there are a myriad of different loan terms available; however, there are many common themes among hard money lenders.

Below are the most commonly asked questions about hard money loans and how to get them through us. If you need any other questions answered, please feel free to email us or contact us at (800) 883-8290 and we would be more than happy to help.

How quickly can I get a hard money loan?

One of the greatest things about a hard money loan is the speed at which you can get one.  Sometimes approvals can be granted in as little as 24-48 hours and settlements can take place in less than a week.  Remember, however, that the lender will have to make an appraisal of the property, order and inspect title work, and have lender documents drafted.  This could take anywhere from days to weeks depending on the circumstances but, in an emergency situation such as foreclosure, we may be able to speed up the process to accommodate you.

Can I get a pre-approval letter?

Yes.  If your real estate transaction requires a lending pre-approval letter, one of our underwriters can provide that to you, most of the time in the same day it is requested.

What are the lender fees?

There are no “set” fee schedules.  However, hard money loans generally cost 4-5 points.  One point equals 1% of the loan amount.  Some or all of these points may have to be paid up-front, but many times we will let you build the points into the back of the loan (we will increase the loan amount to cover the points).  You will have to pay for an appraisal of the property, some document preparation fees, and perhaps some underwriting and/or application fees.  Any required fees will be disclosed to you up-front.

When is a hard money loan not appropriate?

Hard money is not appropriate in some circumstances:

When you need money “long term.”  Most hard money deals are for no more than 6 months to 2 years;
When the deal is “tight.”  Don’t look for hard money loans higher than 65-70% of the conservative property value, if that.  Hard money lenders aren’t interested in losing money, and the only way to insure that is to lend based upon very conservative loan-to-value ratios;
Oddball properties.  Not many hard money lenders are looking to get involved in farm operations, mobile homes, or geo-desic domes.  Don’t ask;
Principal residences.  Hard Money Bankers, LLC is not properly licensed to provide loans to owner-occupants.  We only lend on commercial or investment properties.

Will you lend on a primary residence?

No.  State and Federal laws have strict disclosure requirements for consumer mortgage loans, as well as “caps” on fees and interest rates.  Hard Money Bankers is not licensed and does not lend on primary residences.

I am days away from foreclosure. Can you help? Can I get a loan?

Maybe.  Hard money loans can close quickly, so depending on how soon your upcoming foreclosure is, we may be able to close a loan beforehand.  If not, there still may be many options available to you to stop the foreclosure proceeding.  If you contact us, we will try to help you find a solution.  And remember to always review all your options with a real estate attorney or consultant experienced in these matters.

Why shouldn’t I just use my home equity credit line?

You can, and certainly the interest rate is bound to be much lower than a hard money loan.  Just remember that the more credit you take out on existing credit lines, like the ones you may have on several of your rental properties, the lower your credit score will go, as potential creditors don’t like to see you “maxing out” your open credit.  It is a sign of potential distress.  Most hard money lenders are private companies or individuals and do not report to the credit bureaus, so your credit scores are better protected. .

What are the loan terms?

Every hard money deal has different lending criteria and different point structures and interest rates.  As a general rule, count on an interest rate anywhere from 13-15%, and you will probably have to pay anywhere from 4-5 points. Sometimes we will require points to be paid up-front, while other times we can build them into the loan amount.  We have come to find that each hard money deal is unique and it is impossible to provide exact numbers and loan structure until the deal is reviewed and approved, although all loan terms are always disclosed up-front and long before settlement.

Are there pre-payment penalties?

Sometimes yes, sometimes no.  It varies from deal to deal.  Because much of the money used for hard money loans comes from private investors who want to keep their money “working,” we often require minimum guaranteed interest periods.  Once your deal is reviewed, part of the approval process will be advising you of any such pre-payment penalty or guaranteed interest period.

Can I get cash-out to pay tax liens, judgments or other debt?

Judgments and liens that appear on your title must be paid off at closing but, after payment of these items, you may use any additional equity in your property to get cash at closing up to the “loan-to-value” limits.

For instance, if you have a property valued at $100,000.00, and owe $30,000.00 in tax liens, and we approve a loan for 60% of the value of your property, then you will be able to take an additional $30,000.00 at closing for your own use, less any applicable closing costs and lender fees.

What documents do I need to get started?

Before providing documents, you should first complete our Loan Application.  Once we determine your loan fits within our lending guidelines, our underwriter will tell you what documents you need to provide.  If you have an appraisal of the property, you may want to provide that to the underwriter up-front at time of application.  This will help determine the viability of the deal.

Do you allow secondary financing or seller-held notes?

Usually yes. Although there are times when we will not allow secondary liens, most times we don’t worry about where you come up with the remaining money to buy the property, whether from a relative, seller held promissory note, or bank robbery (just kidding).  As a first lienholder, the lender’s money will be the first amounts paid back upon foreclosure and, thus, usually doesn’t care about a second note holder.

Do you check the title? Are there title fees?

Yes.  As with a conventional loan, we will require you to pay for a title search of the property to make certain that you have proper title to the property and the lender is being put in proper first lien position.  You will also have to pay for the title/escrow company to close your loan, record a mortgage or deed of trust in the land records, and issue lender’s title insurance to protect the lender’s interest in the property.

Is there a limit to the number of properties I can buy?

No.  Each deal stands on its own.  If it makes good loan sense, you will get the loan regardless of how many properties you own. .

Do I have to put my own money in the deal?

Sometimes.  We will generally lend you up to 65% of the property value and, unlike a conventional lender, will not reduce the loan amount just because the purchase price is much lower than the property value.  Thus, if you buy right, you may be able to get a loan for 100% of the purchase price, although most times we require you to at least pay closing costs.

For example, if you find a property worth $100,000.00 and get the sellers to unload it for $60,000.00, we may well give you the full $60,000.00 purchase price.

On the other hand, if you are buying a rehab property that is worth only what you are paying for it until such time that it can be repaired, we will most likely will do one of two things:  1) give you only up to 65% of the purchase price (which means you must find the other 35%); or 2) give you the full purchase price and require you to establish a construction escrow to insure you make the repairs to increase the value to an amount substantially higher than the original purchase price.

Do I need an appraisal?

Yes.  We determine value in several different ways: 1) appraisal from a licensed appraisal; 2) appraisal from real estate broker (Broker Price Opinion); and/or 3) internal appraisal by our underwriting team.  You will be charged up-front for our valuation of the property and we will obtain the type of appraisal that best allows us to determine value.  These fees are non-refundable.

Where do you lend?

We currently have offices in Columbia, Maryland and Philadelphia, Pennsylvania. We lend in Maryland, Virginia, Washington DC, Pennsylvania and New Jersey.

How do I get a hard money loan?

The process is explained more fully in the “Lending Process” section of this website, but it is never very cumbersome.  You can also download our Free Report entitled “Seven Steps to Guaranteed Hard Money Loan Approval.” Unlike a conventional bank loan, you will only need to provide basic information about you and the property.  We will evaluate the current and fixed-up value of the property, verify clean title and that we will hold a first lien position, and make sure you have the ability to rehab, sell, or refinance the property within the term of the loan.  The process is much more streamlined than with traditional lenders, thus allowing you to obtain money faster.

I have a low credit score. Can I get a hard money loan?

This will depend on your “exit strategy.”  For instance, if you have found a great deal on a property from a distressed seller, and you intend to merely “flip” the property and all you need is short-term capital to carry you until you re-sell the property, credit scores are not that relevant.  If, however, you intend to rehab the property and carry it as a rental, then you will be need to refinance out of the hard money loan.  In such a case, we will take a close look at your credit to determine why your scores are low and will make sure you have the ability to refinance the loan before risking capital in the deal.

Do I need to provide personal income statements?

Maybe.  Every deal is different.  Once your deal is preliminarily reviewed, you will be told by the underwriter which documents you will need to provide.

Are you a licensed lender?

Hard Money Bankers, LLC is not a licensed “mortgage lender” and does not lend money on primary/principal residences.  We are a commercial/investment lender.  All our loans are either funded by us or by one of our private capital sources.  We also broker hard money loans to other hard money lenders within our network for a fee.  Some States require commercial lenders be licensed and, in those instances, we are.

What type of properties do you fund on?

Currently we lend on residential investment properties and “light” commercial, such as 1-4 unit properties, smaller apartment buildings, small retail shops or office buildings, small bars or restaurants where there is real estate, single family homes, and strip shopping centers.  We have relationships with other commercial lenders that handle larger projects, so feel free to contact us and we can refer you.

Are the loans fully amortizing?

No.  Most or our hard money deals require interest-only payments that usually “balloon” in 6-18 months, meaning the entire principal must be paid back at that time.

Do you lend on purchase price or appraised value?

We usually lend on appraised ARV (after-repaired-value).  Thus, if you purchase a property far under its ARV, we may be able to lend you 100% of the purchase price.  You will, however, usually have to pay closing costs.

Can I roll closing costs into the loan?

Sometimes we will allow you to roll points into the loan.  However, most other title and lender fees, or other closing costs, will have to be paid by you at closing.