What are hard money loans?
When you come across an opportunity to buy an investment property, time is of the essence. Hard money loans are a great fit to help you solve your urgent financing needs.
- Want to renovate a property and lease it up before selling it?
- Need to close quickly on a property because your other financing option fell through?
- Want to be the winning buyer on that single-family rental by having a “cash offer”?
- Need a quick cash-out refinance to get the money to buy another investment property?
The solution may be to get a hard money loan. Hard money loans are also called bridge loans or private money loans, but they mean the same thing. At HML Investments we have funded hard money loans in as little as 3-5 days before.
A bridge loan or hard money loan is a short-term mortgage loan (usually 6 to 24 months) used to acquire or refinance a property when conventional financing is not available or will simply take too long to close.
It acts as a “bridge” until you are able to pay off the loan or secure more permanent financing. Hard money loans are great when you need to close fast, have poor credit, the property doesn’t generate income, or if you are a foreign national.
Learn how a hard money loan can help you close your investment property in a matter of days by checking out our hard money loan program.
What are the benefits of a commercial or residential hard money loan?
Not sure if a commercial or residential hard money loan would work for your situation?
Speed to close
With a hard money loan, you can get to the closing table in a matter of days.
The decision to lend is based on the asset. A hard money lender is only focused on the condition and current value of the property. Hard money lenders don’t verify personal income, don’t have a minimum credit score, or care about DTI ratio or seasoning of funds.
Certainty of closing
With a conventional bank loan, the underwriting process is extremely long and tedious and may result in denial after months of submitting paperwork and back and forth. With a hard money loan, you get an approval within 24-48 hours and the funding will occur within days after that.
Commercial and residential hard money loans to solve any problem
Every day, borrowers need residential and commercial hard money loans nationwide. Below are the most common reasons why a real estate investor would need a hard money loan.
- When you need to close in less than 1-2 weeks
- When the property is not occupied and not generating any income (not leased).
- When the property is in poor condition or needs renovations.
- When you have bad credit (less than 600)
- When you can’t provide verifiable income or if you are self-employed (no tax returns available).
- If you are a Foreign National Borrower
Other common reasons for hard money loans are:
Foreclosure or credit issues
- If you’re in foreclosure now, with a hard money loan you can pay off your current lender and save your property.
- If you already had a foreclosure in the past, missed a mortgage payment, had a bankruptcy, and you need to purchase a new property or refinance, a hard money loan may be your only option until you repair your credit.
Loan denied at the last minute
Oftentimes, our borrowers come to us after being turned down by another bank or conventional lender. Many common reasons for a decline include:
- Unable to verify personal income
- Credit score dropped
- High debt-to-income ratio (DTI)
- Unable to provide Verification of Mortgage
- Unable to meet seasoning and sourcing requirements for assets and cash in the bank
- Foreign nationals who only have an ITIN number and no SSN
With a hard money loan, we don’t care about any of those issues mentioned above. All we care about is the property itself and that the borrower has enough “skin in the game.”
Urgent need to refinance a loan coming due or past due
A hard money loan can also help with any urgent needs you may have with an investment property you already own:
- Your loan is about to mature but you don’t have the funds to make the balloon payment in time.
- You need to pull out cash from the equity in your property for an urgent need.
- You are going through a divorce or need to buyout a partner and you need to refinance the property you used to own together
To learn how hard money loans work click check out our channel on youtube.