Hard Money Loan
A hard money loan is based on “hard” assets, like real estate. These loans are short-term loans, usually extending for around 6-12 months
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Apply nowWhat Is a Hard Money Loan?
A hard money loan is based on “hard” assets, like real estate. These loans are short-term loans, usually extending for around 6-12 months, and are often the ideal solution for real estate investment projects. Because the loan is secured by real property, the state of your credit, while important, is less critical. The property’s location, total value, and available cash assets or pledged real estate collateral can offset less-than-perfect credit. Hard Money loans differ from conventional loans in several ways. Most hard money lenders calculate the amount you can borrow based on either the “as-is value” of your property or the “After Repair Value” (ARV). Repayment is not structured on amortization but simple interest-only payments. Then at the end of the term, you pay the principal in a lump sum. Hard money loans are ideal for “fix and flip” or “fix and hold” deals.
Why Use Hard Money Loans?
There are many situations where hard money loans can be ideal for investors, including:
Securing financing very quickly- Conservation of capital/no big down payments
- Properties that need renovation and don’t qualify for traditional loans as is – perfect for fix and flip loans.
- Securing financing very quickly
For more information on Hard Money, see our Investment Property FAQs.
What Is a Hard Money Loan?
A hard money loan is based on “hard” assets, like real estate. These loans are short-term loans, usually extending for around 6-12 months, and are often the ideal solution for real estate investment projects. Because the loan is secured by real property, the state of your credit, while important, is less critical. The property’s location, total value, and available cash assets or pledged real estate collateral can offset less-than-perfect credit. Hard Money loans differ from conventional loans in several ways. Most hard money lenders calculate the amount you can borrow based on either the “as-is value” of your property or the “After Repair Value” (ARV). Repayment is not structured on amortization but simple interest-only payments. Then at the end of the term, you pay the principal in a lump sum. Hard money loans are ideal for “fix and flip” or “fix and hold” deals.
Funding Guidelines Residential Investment Properties
6-60 Months based on qualifications & project. Up to 80% ARV (After Repair Value)
- Funding Amounts: $250,000 – $50,000,000
- Pre-Payment Penalty: None
- Lien Position: 1st
- Time to Funding: 5-10 Business Days (Standard)
- Fast Track Funding As Few As 4 Days
We Carefully Balance Opportunity & Responsibility with Credibility & Transparency
Our Loan Specialists have analyzed countless investment deals. We’re happy to help you find just the right solution. The Super-Simple Application™ takes fewer than 3 minutes to complete. A knowledgeable Loan Specialist will contact you right away, help you with any questions, and assist you in making the best choice. There’s no obligation on your part. The only obligation is our obligation to ensure you are 100% satisfied with our service.
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Can I Receive a Hard Money Loan with Bad Credit?
Since hard money loans offer quick short-term funding, your credit score often isn’t considered. The lender approves your hard money loan based on the value of the property you’ll be using as collateral. Because your credit score doesn’t affect your hard money loan, you may receive your funding in days – not weeks – unlike traditional loans through conventional lenders.
Can I Refinance My Hard Money Loan?
Most lenders give you the option to refinance your hard money loan, and the process is similar to refinancing any other kind of loan that you have. However, depending on the terms of your loan, the hard money refinance process may differ in some ways. Before signing any contract, you should discuss hard money refinancing options with your loan provider.Actual Cost Associated With Hard Money Loans
Now we’re getting down to the juicy facts! Avoid the most common mistakes calculating the actual cost associated with hard money loans. This requires some expertise. Many people focus solely on the interest rate charged on the loan. It’s important to consider other costs into your calculations before agreeing on a lender.Here are some of the costs that may be associated with your loan:
- Interest Rate: Interest rates on hard money are higher than traditional loans, but the loan term is much shorter. It’s wise to consider the actual dollars that will be paid during the term of the loan, rather than the APR. While there are hard money loans available for less, the average APR tends run between 10-15 percent, depending on three things: the lender, the property and the borrower’s qualifications.
- Points: Points are calculated as a percentage of the loan amount. This is the charge for originating the loan. With most lenders, points can vary between 2-4 percent of the total loan amount. The actual points charged on your loan may depend heavily on the loan-to-value (LTV) ratio of your deal, the interest rate charged and the risk associated with the loan.
- Processing and Underwriting Fees: Lenders typically charge a fee to process the loan application and documentation in order to underwrite the loan
- Appraisal Fee: Typically the borrower pays a fee for an appraisal by a licensed appraiser.
- Referral Fees: If you were referred to your hard money lender by a REALTOR® or broker, a referral fee might be added to the cost of your loan.
- Pre-Payment Penalties: Check the fine print for fees charged for paying off loans early. Some, but not all, hard money lenders charge a pre-payment penalty.
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