Hard Money Lending
What is Hard Money Lending? Traditional loans place a great deal of emphasis on a borrower’s ability to repay a loan by looking at the borrower’s income, credit, and assets. Hard money loans, on the other hand, work differently from traditional loans in that they are more focused on evaluating a borrower’s collateral rather than focusing on a borrower’s personal income or credit.
Since this is the case, it takes less time to secure a loan via hard money lending than it does to through the more traditional means.
Who Uses Fast Money Lending? When a borrower is in need of a loan and traditional means of obtaining a loan are not available to that borrower, a hard money loan is an attractive viable option that can help the borrower in achieving their goal.
How Does Fast Money Lending Work? Collateral can range from residential, multi-family, commercial, or raw land properties. Basically, nearly any property that is being used in order to secure a loan is considered to be collateral. Typically hard money lenders keep their loan-to-value ratios fairly low.
By keeping the loan-to-value ratio between 50%-70%, lenders will have confidence that if things do not work out, they will be able to sell a property within a reasonable amount of time in order to recoup the money from the original hard money loan.
When To Use? Hard money loans typically work as short-term loans, usually with terms that range from one to five years. As this is the case, interest rates are typically higher than that of traditional loans, however, if a borrower is working with a good lender then the terms and conditions will be agreeable from both sides of the fence.
The idea of putting up collateral may sound intimidating for some; however, itâ€™s important for the borrower to understand that an asset secures the loan so that everybody involved in the transaction is safe.
The Benefits? •
A major advantage that a hard money loan presents is the ability to borrow funds for renovation expenses.
Hard money loans can come into fruition much quicker than conventional loans.
In most cases credit will have little or no affect on approval of a loan.
With hard money loans a lender does not need to verify other assets besides the property or properties that will secure the loan.
FAQs on Hard Money Lending How much does my credit score matter? A borrowerâ€™s credit score will matter to an extent, however, more than anything hard money lenders are mainly concerned with the value of the property involved. Other factors of main focus will include how much repairs may cost, and how much a borrow is paying for the property.
What is the typical Loan-toValue that Hard Money Lenders seek?
For the most part, most Hard Money Lenders do not want to go beyond 70% of the after-repaired-value on a property.
FAQs on Hard Money Lending Can I apply a hard money loan to a commercial property or apartment buildings?
Do hard money lenders require any sort of an appraisal?
Yes, though it works on a case by case basis, commercial properties and apartment buildings are eligible for hard money lending.
Hard money lenders will indeed require an “as-is” appraisal prior to any work being done as well as an “asrepaired” appraisal once the work has been completed.
If you are in need of a quick and forgiving loan, then a hard money loan is perfect for you. The process is fast and smooth and will cause little stress for the potential borrower. Where as more traditional loans can take anywhere between one to three months before a loan is approved. There are situations that require that the process move at a faster rate and for that you should consider hard money lending as a viable outlet to achieve your goals.
Contact Us Vantex Capital Group differs from most private money lenders in that we have a vast number of resources to provide the funds you need for your particular situation. We have funds available for ALL types of real estate loans if the deal makes sense.
At Vantex Capital Group, we pride ourselves on excellent customer service. We strive to make the hard money mortgage process a pleasurable experience for you. We are always available to answer any questions or address any concerns you may have throughout the entire process.