What Are Hard Money Loans? Borrowers Guide
Hard money loans are an excellent tool for flippers and rental investors. They help them buy and close real estate deals quickly.
In the article, CS Financial Group Inc. will guide and help you explore the details of hard money lending.
It will cover what are hard money loans. How do these work, what are their pros and cons, and does it fit your investment strategy?
What is Hard Money Lending?
Hard money lending is a real estate loan from private investors or companies specializing in short-term, asset-based loans.
A hard money loan is secured by the property’s value, not the borrower’s credit. This makes them popular with investors (flippers). They may not qualify for traditional loans or need quick cash.
How Hard Money Loans Work
The process of getting a hard money loan typically involves the following steps:
1. Finding a Lender: You must find a reputable hard money lender. They should specialize in your desired property type.
2. Property Valuation: The lender will check the property’s value. This may involve an appraisal to determine its current market value.
3. Loan Application and Approval: You must submit an application, which the lender will review. They’ll consider the loan-to-value ratio (LTV), the property’s potential profit, and your exit strategy.
4. Funding: Once approved, you’ll receive the loan funds for your real estate investment.
5. Repayment: You’ll make regular payments to the lender, usually monthly or quarterly, until you repay the loan. The loan term is generally shorter than traditional loans, lasting 6 to 24 months.
Now that you understand how hard money loans work, let’s address a common question about down payments.
Learn more by reading our insightful article, “Do Hard Money Lenders Require a Down Payment?“
Pros and Cons of Hard Money Loans Vs. Mortgage
Feature | Hard Money Loan | Mortgage |
Speed | Days or Weeks | Weeks or Months |
Flexibility | Flexible | Less Flexible |
Requirements | Focus on Property Value | Focus on Credit Score |
Interest Rates | High Interest Rate | Lower Interest Rates |
Risks | Higher Risk (Short Investment) | Lower Risk (Long Investment) |
When considering hard money loans, weigh the benefits against the drawbacks. Learning more about the “pros and cons of hard money loans” will help you make an informed decision.
Our Specialized Loan Programs
Our hard money loan can provide for various real estate investment strategies. Real estate investors often use a hard money loan to:
Bridge Loans
Our bridge loans are a valuable tool for investors who need to quickly purchase a new real property while waiting to sell an existing one. They provide short-term financing, allowing you to seize opportunities without delay.
Fix-and-Flip Loans
Our fix-and-flip loans are for investors who buy, renovate, and quickly resell properties for a profit (flipping). They offer short-term financing to fund both the purchase and renovation costs.
Short-Term Loans
Need to close a real estate transaction fast? Our short-term loans provide the quick capital you need. We offer flexible terms and competitive rates to help secure your investment property in Irvine, CA.
Construction Loans
Our construction loans have flexible draw schedules. They fund ground-up construction or major renovations as the project progresses. This ensures you have the necessary capital at each stage of your project.
Why Partner with CS Financial Group, Inc.
Local Expertise
We know the local real estate market well. So we can assess your investment property’s value. We can also find the best financing solutions.
Service Personal Loan
Our skilled team is dedicated to guiding you through the loan process. We understand your unique needs and goals to ensure a smooth, stress-free experience.
Commitment to Support
We’re more than a lender; we’re a partner in success. We commit to supporting your real estate investments. We are providing guidance and resources to help you achieve your goals.
At CS Financial Group Inc., we understand that time is of the essence in real estate investing. That’s why we’ve streamlined our process to ensure the fastest possible funding for your projects.
Our simple documents, appraisals, and quick disbursement funds let you seize opportunities. Plus, our 24/7 support team of experts is always available to answer your questions and provide guidance details.
Hard Money Lenders Application Process
Step 1: Gather Required Documents
Prepare info, including your investment experience, income verification, credit history, property details…etc.
Step 2: Complete the Application
Please complete our simple loan application. It must have an accurate, complete info profile about you and the investment property.
Step 3: Property Appraisal
Our hard money lender appraises the property to find its market value. It is crucial for determining the loan amount.
Step 4: Loan Approval and Funding
Our experienced team will review your application and make a prompt decision. Once approved, we’ll work swiftly to disburse your funds so you can close your investment property immediately.
Ready to secure funding for your real estate project? Our guide, “How to Apply for a Hard Money Loan,” will help you apply for hard money loans in only 4 steps.”
Frequently Asked Questions
What are alternatives to hard money loans?
Alternatives include traditional mortgage lenders, home equity, and private money loans. But these options often have stricter requirements and longer waits. So, they are less suitable for time-sensitive real estate investments.
How do I qualify for a hard money loan?
Qualifying focuses on the value of the property used as collateral and its potential profitability. In addition, lenders will also consider your credit score. But, they often focus on the deal’s strength and your ability to repay the loan.
What are typical interest rates on hard money loans?
Interest rates vary based on loan amount, LTV, property type, and borrower experience. Expect hard money loan rates higher than traditional loans, typically 8% to 15%.
What is the loan-to-value ratio?
Hard money lenders usually offer LTV ratios of 65% to 75%. This is often lower than those of traditional lenders. However, some hard money lenders, like CS Financial Group Inc., can offer LTVs of up to 90%. This higher loan-to-value ratio is based on specific borrower criteria and circumstances.
How long does it take to get funded?
One of the most significant advantages of hard money loans is their speed. Funding can often be obtained in a few days or weeks. However, it is much faster than traditional loans.
What are the requirements for getting a hard money loan?
Terms for hard money are straightforward. You’ll need a completed application and a property appraisal. Proof of funds for your down payment and closing costs is essential.
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!