Real Estate Hard Money Lenders

The value of the loan is dependent on the value of the property and the approval method is dependent on the credit score and income-to-debt ratio of the borrower.

Hard money loans are asset-based loans, and as hard money lenders we are concerned with the value of the asset used as collateral for the loan. Traditional banks and lenders are concerned with only the borrower’s credit and income. Whereas standard loans are typically for 15–30 years, hard money loans are used as a bridge (1–3 years) to buy, remodel, or stabilise a commercial, retail, office, industrial, multi–family, or single family residential house.

We evaluate all background information to see if you can realistically commit to make the required payments. Because we do not investigate your financial history when making a hard money loan, they immediately assume a larger chance that you would default on the loan. We accept this risk since the home is designated as collateral, which means we may resell the property if the borrower defaults on their loan payments.

Unlike traditional banks, banks require a minimum of 45 days to fund a single-family residential loan, anywhere between 60–90 days to fund a commercial credit, and more than 120 days to fund a development loan. A hard money loan, on the other hand, is often funded within 7–14 days. The paperwork isn’t as strict and the closing process is made easy by our agents. The interest rates even though it is a bit on the higher end, it is still competitively lower than hard money loans offered by other private lenders.

Because banks do not issue hard money loans, they are generally employed in real estate transactions when the lender is an individual or a firm. These loans normally have a term of one to three years and are widely used to get funds rapidly. Real estate investors who need quick credit for a big transaction to avoid losing valuable real estate property to other competitors usually take help of hard money loans. In some cases hard money loans are taken by individual homeowners. For example, If you want to buy a new house but your present one hasn’t sold yet, a hard money loan might be a method to utilise your current home as collateral and free up funds to purchase your new home. This is also an intriguing alternative for homeowners facing foreclosure because the cash may be given promptly. Buying an investment property and flipping properties are two more typical reasons for hard money loans.

Most traditional banks will not lend on houses that require repairs due to their extremely conservative underwriting criteria. Nonetheless, a personal lender like us would gladly lend on a property that either lacks cash flow or needs physical advancement as long as the borrower has enough equity value. Although your credit worthiness is not a consideration in applying for a hard money loan, we do analyse numerous variables before approval, including your home equity, debt-to-income (DTI) ratio, and loan-to-value (LTV) ratio. Hard money loans can be supplied rapidly if approved. However, there is a cost to this speedier turnaround time: higher lending rates and origination costs. Overall, hard money loans are more expensive since the lender is taking a bigger risk by making the loan. Give Best Rate Rental Loans a call if you wish to know more about real estate hard money loans.