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What Is A Hard Money Loan

Hard money loans are funded by private investors, as opposed to traditional banks, they are often referred to as ‘private money loans.’ Hard money loans are based predominantly on the value of a property, versus a borrower’s credit score or financial history. The loan amount is determined by the loan-to-value ratio (LTV), or the ratio of the loan amount divided by the value of the property used as collateral. Even though hard money loans are faster and easier to get than conventional loans, borrowers still need to go through the underwriting process and qualify.

Why Use A Hard Money Loan

  • Quick Closings 
  • Faster Underwriting & Approval Process
  • Minimal Documentation Required 
  • Short Term 
  • High Debt To Income Ratio limiting your ability to get approved by a conventional bank 
  • Not Enough Capital To Cover Rehab Costs On A Home Flip 

Requirements To Obtain A Loan

Because lenders are basing the loan off the asset itself the requirements to be approved are minimal compared to traditional bank financing. Here is a list of typical requirements to expect. 

  • Location, Location, Location. Most lenders want to lend in areas that are desirable where you can be in and out of a house fairly quickly 
  • Experience is a plus but not required, however, the more experience a borrower can show the better the terms of the loan
  • The type of property being financed 
  • The intended use, the scope of work (The rehab being performed), and exit strategy meaning are you selling the house in the future or refinancing it to a longer-term
  • A clean background 
  • A valid government issue ID
  • No Bankruptcies in the last 36 months 

If you need help with obtaining a hard money loan for a future investment property be sure to apply here or reach out to us via phone at 877-231-3111 or email at info@nvestorfunding.com

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