How long does it take to get a hard money loan?
A hard money lender can quickly offer you a loan, typically in a few days. However, most hard money loans close in 2 to 3 weeks.
In this article! We cover the entire process, factors affecting speed, and expert advice to help you get a loan fast.
What is a hard money loan?
Hard money loans are a type of short-term financing secured by real estate. They differ from traditional bank loans and often focus on the collateral, not the borrower’s credit.
It is a good option for real estate investors and flippers. They also suit those needing quick capital for real estate ventures.
Feature | Hard Money Loans | Traditional Loans |
Loan Purpose | Short-term loans projects | Long-term loans projects |
Loan-to-Value | LTV ratio 65-75% | 80% (can go up to 97%) |
Interest Rates | Low interest rates (3 - 7%) | |
Credit Score | No focus on credit score | Focus on credit score |
Loan Term | 6 - 24 months | 15 - 30 years |
Approval Time | Faster approval | Slow approval |
Flexibility | More speed and flexibility with terms, underwriting | Less flexible with stricter lending criteria |
Funding Source | Group of investors or Lending company | Commercial banks and Financial institutions |
Factors Affecting the Process of Getting a Hard Money Loan
Property Evaluation
Type of property: Residential properties like single-family homes and condos have shorter loan processing times. They have simpler valuations and less complex due diligence.
On the other hand, commercial properties need more work. Office buildings and retail spaces require thorough appraisals.
Purchase a property: Includes the buy price, market value, and after-repair value (ARV) for fix-and-flip projects. A clear and well-supported valuation can hurry the process.
Equity: Your equity in the deal shows your commitment. It can affect the lender’s decision-making speed.
Loan Assessment
LTV Ratio and Loan Amount: Larger loans and higher LTVs need more scrutiny and docs. Meanwhile, smaller loans with lower loan-to-value (LTV) ratios are typically close faster.
Borrower’s Financial Capacity: Lenders check your credit, income, and debt-to-income ratio. They do this to assess your ability to repay a loan. A strong financial profile can speed up the process.
Lender’s Processes and Requirements
Established lenders with streamlined systems and clear guidelines can fund loans more quickly. In addition, each lender has its own specific requirements, so understanding them upfront is crucial.
Borrower’s preparedness
The borrower’s preparedness can also impact the closing timeline. Borrowers with all their docs ready to close will close faster than those without.
Legal and regulatory considerations
Legal and regulatory considerations can also impact the closing timeline. For example, if the property is in a highly regulated area, it may take longer to close the loan.
Exit Strategy
A clear exit strategy, whether flipping or renting, builds lender confidence. It can speed up loan processing.
Typical Timeline for Getting a Loans
Initial consultation and application (1 to more than 2 days)
Connect with a hard money lender to discuss your needs and the property you want to buy. You must apply and provide documents like credit reports and income verification, which usually takes 1to more than 2 days.
Property appraisal and underwriting (2-5 days)
The lender will order an appraisal to determine the property’s market value. They’ll also review your financial information and the deal’s specifics. This step typically takes 2 to 5 days.
Approval and funding (1-3 days)
Once the appraisal and underwriting are complete, the lender will decide. If approved, they will complete the loan documents and fund the loan. This can be as quick as 1-3 days.
While the timeline for getting a hard money loan can vary, understanding the application process is key to ensuring a smooth and efficient experience. Learn more about how to apply for hard money loans and navigate the necessary steps with our comprehensive guide.
Steps to Expedite the Process
Preparing the necessary documentation in advance
Hard money lenders require less documentation than banks. You must prepare your credit report, bank statements, and property info first. This shows you’re organized and serious about the loan.
Choosing an experienced hard-money lender
Not all lenders are equal. You should look for a lender with a proven track record of quick closings and experience in your real estate deal.
Clear communication and prompt responses
Respond quickly to the lender’s requests for information. Also, keeping the line of communication open will help keep things moving and avoid delays.
Frequently Asked Questions
What’s the fastest turnaround time you’ve seen for a hard money loan approval?
The fastest turnaround times can be as quick as 72 hours. However, getting a loan usually takes around 2–3 weeks.
How can I improve my chances of getting a hard money loan quickly?
A property’s value, strong credit score, a clear investment plan, and all docs can speed up the process.
What factors can cause a large delay in funding a hard money loan?
Common delays include title issues, appraisal discrepancies, and missing borrower docs. Also, unexpected repairs may be needed before closing.
Sandy Yuen is a certified mortgage broker. In 20 years of hard money lending, she’s funded over $450 million for investors. She specializes in fix-and-flip, bridge, and construction loans.
She also funds projects like second homes, apartments, and commercial and shopping centers. Sandy, a trusted lender, served over 500 clients in Irvine, CA. She is known for her fast approvals, flexible rates, and high transparency.
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Local & National
While we are based in Southern California, our reach is national. For the exception of a few states, we have funded loans all across America in some of the largest and most active metropolitan areas.
We have also worked with clients ranging from local, national, to global, helping them secure the right loan for their project.
Ready to Start?
Let’s being the process with a complimentary consultation. As we specialize in custom hard money loan solutions for our clients, we want to better understand your specific needs in order to offer you the best program available.
Please fill our inquiry form to get the process started!