Hard Money Loans
What’s A Hard Money Loan?
Hard money loans differ from the “soft money” loans given by financial institutions. Soft money loans are the average 20 or 30 year mortgages provided by banks. Qualification for soft money revolves around the creditworthiness of the buyer(s). Generally, the applicant’s credit score, income, and financial stability determine the interest rate and loan amount. Soft money loans are often pre-approved for a certain amount based on the borrower’s financial history, leaving the borrower free to choose between a variety of properties that fit the loan parameters.
By contrast, hard money is based on the property it is leant on. The loan applies only to that specific property. In most cases, the borrower’s income and credit history have no bearing on loan approval. A hard money loan also has fast approval times, often as little as 24 hours. Soft money loans may take 30 days or more for approval.
Hard money is approved much faster because qualification is straightforward. The primary criteria is equity in the property. Generally, hard money loans are for up to 70 percent of the after repaired value (ARP). ARP is used because hard money is often used to fix up properties that need substantial work.
Hard money loans are for much less than the full value of the property because the loan comes from private individuals instead of banks and borrower credit history has no bearing.
Why Prime Plus Mortgages?
- Up to 90% LTV
- 10 – 16% interest rate
- Asset based, not credit based lending
- Funds available within 24 hours if needed (our loans really are fast)
- Points vary based on the deal and borrower experience
- No pre-payment penalties
Flip Or Rent It
”Very impressed with this funding group. They made the transaction easy and the money was there for closing right on time. I will use them on future transactions.Brad PickettCustomer
Why Would I Need A Hard Money Loan?
Hard money loans are short-term loans. They are intended to tide the property owner over until he or she can repair, sell, or refinance a property. They also provide investors with a valuable resource when they need to close a deal fast. Because approval takes just 24 hours, investors can use the hard money to beat the competition to a sweet deal.
Homeowners who have equity in their property but cannot qualify for a soft money benefit greatly from loans provided by a hard money lender. Often, a home needs substantial repairs. Because hard money loans are based on the ARP, the homeowner can obtain the loan in 24 hours based on the value of the home after repairs. This puts the necessary cash in the homeowner’s pocket right away.
Homeowners who are facing foreclosure and want to save their home because it has substantial equity also benefit from hard money loans. They can use the funds to stop the foreclosure and then refinance the mortgage when times are better.
Where Can I Find A Hard Money Lender?
One of the best features of hard money loans are the easy application processes. The first step is to contact a hard money lender. Once you provide the lender with the property information, your loan consultant can qualify you for the loan and get you the money in as little as 24 hours.
For example, Prime Plus Mortgages of Scottsdale, Arizona provides a streamlined application process with very little paperwork. Prime Plus has hard money loan experts available by phone who can walk you through the process. Remember, one of the beauties of hard money loans is the no-hassle application. You get the funding you need no questions asked.