Hard Money Loan FAQ
Information regarding loans is often filled with a lot of abbreviations and legal text. It can be confusing and indimidating. So, we’re here to answer any questions you may have.
1. What is the difference between a real estate investment loan (asset based) and traditional bank loans?
Traditional banks generally have many more guidelines and lending criteria that make it nearly impossible to get a loan from them for the purpose of buying, rehabbing, and reselling residential properties. Asset based lenders specialize in loans against these types of distressed properties. Asset based loans are usually short term and have somewhat higher interest rates, BUT can close quickly and finance repairs, and closing costs when purchasing within 70% loan to value.
2. What is the loan term?
Our loans typically range from six month to eighteen months with built in extensions. You will be required to pay an extension fee at the time of each extension.
3. What are your rates and fees?
Our rates and fees will vary depending on the quality of the deal and your personal financial situation, but the interest rate will range between 10% and 13% and the origination fees will range from 2% to 5%. Each deal will also have the following fees:
|Flood Determination Fee||$45.00|
*These above is subject to change, but the fees are transparently lined out in the Term Sheet, Serving Letter, Loan Documents, or some combination thereof.
4. Are there any fees that are paid up front?
The Processing Fee and the Valuation Fee are due at acceptance of committed terms. All other fees are payable on the HUD or upon Draw Inspection
5. How do I know how much to pay for a property?
We typically suggest not paying more than 75% of ARV minus repairs, If you need help coming up with this figure please fill out the quick app and a representative will be in touch.
6. I found a property, but I am unsure about the After Repaired Value or repair costs. Can you help me determine if it is a good deal?
Yes. Please fill out the Quick App on our website to submit an inquiry. An associate will typically reach out within two hours of an inquiry during normal working hours.
7. How much can I borrow?
This will vary depending on the quality of the deal and your personal financial situation, but we will loan up to 75% of the After Repaired Value (ARV) of the property. Take again the example above of a property worth $100,000.00 with $15,000.00 in repairs. We might loan as much as $55,000.00 towards the purchase of the house with an additional $15,000.00 held in escrow for you to repair the property. At this time, we do not have a minimum or maximum loan amount.
8. Will you also finance the repairs?
Yes, upon proper inspection funds will be released as the value of the asset improves.
9. What are your credit requirements?
Our minimum credit score is 580, however rate and terms can be adjusted based on credit factors.
10. How much cash do I need to bring to closing?
This is determined on a deal-by-deal basis. We encourage you to reach out to a representative to discuss your unique scenario.
11. How much available cash will I need to qualify?
We will provide an estimate before commitment, but a good rule of thumb is 6 months’ worth of payments plus one-third of the cost of repairs.
12. What if I don’t have enough cash? Can I use my credit?
We can take accessible credit into consideration for liquidity.
13. Do you loan on rental property?
Yes. We have several partners we work with for long term needs.
14. Do you loan on commercial property?
15. Do you loan on multi-family properties?
Step 1: Contact Us
To get started, simply fill out the contact form.
Step 2: Meet Your Loan Officer
One of our Loan Officers will contact you to learn more about what you’re looking to accomplish. We’ll then offer feedback on the best options for you.
Step 3: Submit Paperwork
Once you’ve started the loan application process you’ll need to submit all your paperwork in a timely manner. Your Loan Officer will guide you through this process.
Step 4: Get Your Loan
Once you’re approved, you’ll receive your loan. If you have any questions, we’re always here to help.