Everything You Need to Know About Hard Money Loans
Main benefits of hard money loans
- Quick approval: borrowers can often receive funding in just a few days or weeks.
- Loose requirements: hard money lenders will typically overlook credit issues on a borrower’s record that would prevent traditional bank lenders from approving a loan.
- Flexible terms: there is no restriction on private hard money lenders to use a pre-established term sheet which means there is more room to negotiate the loan’s terms.
Who should get a hard money loan?
Hard money loans are most popular among fix and flip investors—people who purchase a property intending to renovate it and sell it for a higher price. They appeal to just about anyone with tight time constraints. In addition, hard money loans are popular among borrowers with low credit scores or other credit issues. This is because hard money lenders are typically less focused on creditworthiness since they tie the collateral of the loan to the property.
Hard money loan requirements
Fortunately for borrowers, the requirements for hard money loans are fairly lenient which is why they often have a quick approval process. To qualify for a hard money loan, lenders will consider the amount of equity that a borrower invested in their real estate property. They will use this as collateral to offset the risk. According to Bankrate, “Hard money lenders typically require loan-to-value (LTV) ratios of around 50 percent to 70 percent.” Additional requirements may include a detailed financial and renovation plan. This plan should showcase the borrower’s research and preparation for the project. It will help prove that they’ll be able to eventually pay off the loan. Essentially, you should be able to determine a solid exit strategy and demonstrate how the arrangement will benefit the borrower. If you’re interested in applying for a hard money loan with a private lender in Nevada, consider Streamline Mortgage. We will work with you on a personal level to help you get the funding you need. There is no minimum credit score required and you’ll be able to discuss your situation with the lender to determine if your deal will fund. Contact us today!