Hard Money Loans
Hard Money Loans are an alternative form of financing. Hard Money borrowers do not qualify for a traditional conforming property loan with a bank or other mortgage lender due to either the property being not financeable or due to the mortgage loan borrower’s credit and financial profile. At Lending Network, LLC, we understand the importance of hassle-free financing and lending to qualified borrowers needing private and hard money. Our hard money loan programs are primarily asset-based, requiring a 25% down payment or at least 75% equity.
Lending Network, LLC is a full-service private money lender. Lending Network, LLC has a national reputation as a one-stop lending shop. We have lending partnerships with investors of hard money loans, equipment financing, personal loans, pole buildings, all-purpose loans, auto and truck loans, aircraft, and helicopters, RVs, boats and yachts, and SBA loans.
Our business model at Lending Network is common sense applies. We will consider all real estate types to lend on if it makes sense. Single-family home and investment home financing, multi–unit homes, mix-use properties, apartment buildings, apartment complexes, medical offices, dental offices, warehouses, self-storage units, and office buildings.
What Are Hard Money Loans?
A hard money loan uses the real property as collateral. Unlike traditional loans, hard money loans are based mainly on the value of the property used as collateral, not on the borrower’s creditworthiness. Private individuals or companies specializing in lending to real estate investors usually offer hard money loans. These loans are for different purposes, as follows:
- Buying a property that needs repairs or renovation
- Buying a property that is undervalued or distressed
- Buying a property that has title issues or liens
- Buying a property that is not eligible for conventional financing
- Buying a property that requires a quick closing or cash offer
- Refinancing an existing loan that has a high-interest rate or balloon payment
- Developing land or building a new construction
FAQs About Hard Money Loans
Hard money loans have terms that vary depending on the lender and the project, but they are
Typical:
- Short-term: The loan term is usually between 6 months and two years
- High-interest: The interest rate is usually between 10% and 18%
- Interest-only: The monthly payments are usually only interest, and the principal should be paid at the end of the te
- Low-LTV: The loan-to-value (LTV) ratio is usually between 50% and 70%, meaning the borrower has to put down 30% to 50% of the property value as a down payment
High fee: The lender may charge origination fees, closing costs, appraisal fees, and other fees that can add up to 2% to 10% of the loan amount
Types of Hard Money Lenders
Besides originating and funding hard money loans, Lending Network, LLC is unlike its competitors. We help borrowers with bad credit improve their credit scores and profile. Our separate credit rebuilding and fix division does nothing but help build and maximize our client’s credit profiles. The higher the borrower’s credit scores, the lower the mortgage rates.
We can help real estate investors secure refinance their hard money loans to traditional low-interest mortgage loans. Our subsidiary lending partner, Gustan Cho Associates, are mortgage brokers that specialize in traditional conforming residential and commercial loans in 48 states, including DC, Puerto Rico, and the U.S. Virgin Islands.
Why Use Hard Money Loans
Do you need an easy way to fund your real estate ventures? Do you face challenges getting traditional loans because of your credit score, = income, or property condition? Do you want to seize opportunities that need fast closing and cash offers? Consider hard money loans if you said yes to any of these questions.
Hard money loans are a loan that is backed by real property and offered by private individuals or companies instead of banks. Hard money loans can help you finance your real estate projects, whether flipping houses, buying rental properties, or developing land. Before you decide if hard money loans, consider the benefits versus the negatives of using hard money financing.
If you need to close your real estate deals quickly and easily, hard money loans might be your solution. Hard money loans have many benefits of choosing hard money loan speed: Hard money loans are fast and convenient. You can get the green light in a day and seal the deal in a week. This can help you beat the competition, who may need more time to prepare their funds.
Hard Money Versus Traditional Commercial Loans
Simplicity: You don’t need a perfect credit score, income history, or debt-to-income ratio to qualify for a hard money loan. It would be best to have sufficient property equity and a solid exit strategy to repay the loan.
There is much flexibility with hard money lenders. You can negotiate the terms of your hard money loan with your lender based on your project and situation. You can also use different types of properties as collateral, such as residential, commercial, or industrial properties.
You can use hard money loans to leverage your capital and do more deals with less money out of pocket. You can also use the loan to bridge the gap between your purchase
price and rehab budget.
Risks of Using Hard Money Loans?
Hard money loans are not without risks. This section will cover the drawbacks of using hard money loans. Hard money loans are more expensive than traditional loans in terms of interest rates and fees. You may pay more interest than you make in profit if your project takes longer than expected or doesn’t go as planned.
If you fail to repay your hard money loan on time or according to the terms, you may lose your property to foreclosure. You may also damage your credit score and reputation with your lender and other investors. Fraud: Some unscrupulous lenders may try to exploit you by charging hidden fees, changing terms, or inflating appraisals. You must be diligent enough and research your lender before signing any contract.
How to Apply for Hard Money Loans?
You must follow certain steps when applying for a hard money loan. First and foremost, find a reputable hard money lender. You can ask for referrals from other investors, real estate agents, or contractors who have used hard money loans before.
You can look up online reviews and testimonials from previous borrowers. Look for a lender with experience in your market and niche who offers competitive rates and terms, sufficient capital and funding sources, and good communication and customer service skills.
Mortgage Process of Hard Money Loans
The mortgage process on hard money loans is similar to other loan programs, except for no income review. Due to no income review, the hard money mortgage process takes substantially less time than a full doc loan. The first step is to submit your application. You must complete an application form and send it with your papers to your lender.
Your lender will then check your application and verify your property and project. Your lender will also get an appraisal or inspection of your property if required. If your application passes the lender’s standards, you will get the green light for a hard money loan. Your lender will send you a commitment letter with loan details and rules.
You should read this letter closely and clear any doubts before signing it. Once you sign the commitment letter, you will be ready to close the deal. Your lender will prepare the closing documents and wire the funds to the escrow account. You will then sign the documents at the title company or attorney’s office and receive the keys to your property.
Documents Required For Hard Money Loans
You need to provide some documents and information to your lender, such as:
- ID and proof of income
- A detailed plan and budget
- A copy of your purchase contract and title report
- A copy of your appraisal report or comparable sales data
- References from previous lenders or investors
Popular Hard Money Loan Programs
Different types of hard money loans are available depending on your project and preferences. Here are the common types of hard money loans. Fix and flip loans let you purchase a property that requires fixes or upgrades, spruce it up, and sell it for a gain within a short time. Fix and flip loans are perfect for investors who want to flip houses fast and make cash profits. Buy and hold hard money loan allows you to buy a property that generates rental income or appreciation over time.
Buy-and-hold hard money loans are ideal for investors who want to build long-term wealth through passive income or capital gains. Bridge loans let you purchase a new property before letting go of your current one. This type of loan is for investors who want to dodge uncertainties or delays in funding when switching from one property to another. Land loans let you buy raw land or vacant lots for development purposes. This loan is ideal for investors who want to build new constructions or subdivisions on undeveloped land.
How Do You Plan To Exit Your Hard Money Loans
If used wisely, hard money loans can be a powerful tool for financing your real estate deals. We highly recommend considering several considerations before taking a hard money loan. Before applying for this loan, you should have a clear exit strategy on how to repay the loan at the end of the term. Whether selling, refinancing, or renting out your property, you should have realistic projections on how much profit you will make and how long it will take.
Before buying any property with a hard money loan, you should do your homework on the market conditions, property value, rehab costs, and potential returns. You should also inspect the property thoroughly and get estimates from contractors before making an offer. Once approved for a hard money loan, you should stick to your budget and timeline for your project.
You should avoid overspending on unnecessary upgrades or delays that could affect your profit margin or extend your holding period. As with any business venture, building relationships is key to success in real estate investing. You should treat your lender as a partner rather than an adversary. You should communicate regularly with your lender, update them on your progress, pay on time, and honor your commitments.
