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HARD Money Loans
Hard Money Loans at 70% LTV on investment properties non DODD FRANK. No residential property only investment properties and commercial properties. 75% LTV in Utah and Nevada
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What Are Hard Money Loans?
Hard money loans are a type of short-term financing typically used by real estate investors for quick funding of property purchases, especially those that may not qualify for traditional loans. Here’s a detailed overview:
Key Characteristics of Hard Money Loans
Hard Money Loans are Collateral-Based:
Primary Focus of Hard Money Loans: The loan is secured by the property, not by the borrower’s creditworthiness. The value of the property is the main consideration for approval.
Loan Amount on Hard Money Loans: Often determined by the property’s after-repair value (ARV).
Hard Money Loans Are For Short-Term Financing:
Hard Money Loan duration typically ranges from 6 months to 3 years, making them suitable for real estate flips, renovations, or bridge financing.
Repayment Structure of Hard Money Loans: This may include interest-only payments with a balloon payment at the end of the term.
Higher Interest Rates and Fees on Hard Money Loans:
Interest Rates on Hard Money Loans: Generally higher than conventional mortgages, ranging from 8% to 19%.
Fees of Hard Money Loans: These include origination fees, points (a percentage of the loan amount), and other costs, which raise the overall cost of borrowing.
Fast Approval and Funding:
Speed: Hard money loans can be approved and funded much quicker than traditional loans, often within days.
Flexibility: Lenders may be more flexible with their criteria and terms, focusing on the property’s value and potential rather than the borrower’s financial history.
Common Uses of Hard Money Loans
Real Estate Investment:
Property Flipping: Ideal for investors looking to buy, renovate, and sell properties quickly.
Bridge Loans: Used to bridge the gap between purchasing a new property and selling an existing one.
Commercial Real Estate:
Acquisitions: Financing for purchasing commercial properties requires significant work before qualifying for conventional loans.
Development: Funding for new construction or major renovations.
Advantages of Hard Money Financing
Quick Access to Funds:
Speed: Rapid approval and disbursement compared to traditional loans.
Flexible Terms:
Negotiability: More room for negotiation on loan terms, repayment schedules, and collateral requirements.
Less Stringent Requirements:
Credit Score: Less emphasis on the borrower’s credit score and financial history.
Approval Based on Property: Focus on the property’s value rather than the borrower’s financial situation.
Disadvantages of Using Hard Money Loans
High Costs:
Interest Rates and Fees: Significantly higher costs compared to traditional financing.
Short-Term Nature:
Repayment: Need to repay or refinance the loan within a short period.
Risk of Losing Property:
Collateral: If the borrower defaults, the lender can seize the property.
Hard money loans provide a valuable financing option for real estate investors needing quick and flexible funding. However, they come with higher costs and risks, making it essential for borrowers to carefully consider their financial situation and investment strategy before proceeding.
For further information, you can visit Non-QM Mortgage Brokers at https://www.non-qmmortgagebrokers.com/
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