Hard Money

Hard money loans are collateral-based real estate loans made by private investors instead of banks. These loans fill a need for funding when banks won't lend for any reason, there are credit problems, or there isn't time to obtain conventional financing to secure a purchase or get cash from the equity in a property. These types of loans are sometimes referred to by different names such as private money loans , private equity loans , or bridge loans .

• Purchase real estate — with a sufficient down payment (20% or more), you can secure a new 1st mortgage with a hard money loan
• Refinance a loan — hard money loans to obtain cash from equity, pay off a balloon mortgage, refinance a delinquent loan to prevent a foreclosure, pay off a Chapter 13 bankruptcy, and others. You need at least 25% or more residual equity left in the property after the new loan, including points and fees, to qualify
• Add a 2nd or 3rd mortgage — hard money loans can be used as subordinate financing to existing 1st mortgages for cash out for debt consolidation, remodeling, repairs, business loans, investments, or for any reason
• Secure a bridge loan to purchase new real estate before selling your current property
• To complete construction or rehabilitation on residential or commercial property

The 3 things you must have to qualify for a hard money loan:

1. Sufficient remaining equity in the property (20% or more after the new loan, including points and fees. The amount of required equity for hard money loans varies by property type and investor.)
2. An acceptable property in a marketable area (at our investor's discretion)
3. The ability to repay the loan to the investor (required by law)

• 1st mortgages available on residential properties in California up to 80% of conservative value
• 2nd and 3rd mortgages on residential properties in California up to 80% of conservative value (all liens combined)
  
• Land loans, construction loans, commercial loans-maximum loan percentages vary by type, location and investor (see our Hard Money chart for general guidelines)

You may qualify for a hard money loan, even if …

• You have bad credit, minimal credit, or NO credit — sufficient equity and the ability to repay the loan are more important to our lenders than your personal credit (note: tax liens, current bankruptcy, judgments, clouds on title, etc., may require resolution prior to or at closing) ;
• You have too much debt to qualify for a bank loan — provided you have the necessary equity in your property (or down payment) and the ability to repay the loan, our hard money lenders can make allowances for excessive debt;
• You have non-verifiable, inconsistent, or unusual income — provided you can make the loan payment, our hard money lenders will accept loans made to persons who have unconventional incomes. If you have no income or means of repaying the loan, you will not qualify for a hard money loan, period.
• You have a rural property , unique property , or mixed-use property and have found it difficult to qualify for a conventional loan, as long as there's sufficient equity in the property, and our hard money lender deems the property a worthwhile investment, you qualify for a hard money loan;
• You need a cash equity loan with less than perfect credit and have a 1st mortgage with a negative amortization feature — with the right amount of equity after the required adjustment for the potential negative amortization you may qualify for a 2nd mortgage hard money loan;
• You need a short-term loan to build , rehab , or remodel real estate or make improvements to raw land prior to selling the property or refinancing into long-term permanent financing (note-hard money loans used for these purposes require a future value appraisal and construction documentation for approval) ;
• The property is in the name of a "non-natural person" — your property is held in the name of a trust, LLC, corporation, or an entity — rather than an individual.
• You need a business loan secured by equity in real estate, but cannot qualify or wait for a conventional business, commercial, or SBA loan;
• You are a Foreign National with no long-term U.S. employment or other assets

Do not consider a hard money loan if …

• You would have less than 20% or more equity remaining in the property after the new loan, including any points and fees financed (Note: the amount of required equity for hard money loans varies by property type and investor);
• You are looking for a low-interest rate loan, or a loan with low points and fees;
• You cannot verify any source(s) of income or employment;
• You cannot repay the loan according to the terms of the Note;
• You are looking for an unsecured or personal loan, or open-ended line of credit;
• You are not willing to pay for and obtain a current value appraisal, if required;
• You are not willing or able to provide a "future value" appraisal for a hard money construction loan or remodel loan, including an itemized cost sheet, plans, blueprints, a licensed contractor, and permits where required;
• You are looking for an "angel" or speculative investor to fund a project without sufficient collateral or personal equity stake;
• Your property is in poor physical condition, or has extensive deferred maintenance (unless the loan is used to verifiably renovate the property).
  

Interest rates, terms, points & fees for hard money loans

• Interest rates vary between 8.50%* and 15.00%*, depending on the investor, borrower qualifications, loan amount and purpose, property type, location, lien position, term, prepay period (if any) and any applicable state law;
• Terms vary between 6 months and 20 years, mostly interest-only (some amortizing loans), depending on the investor, borrower qualifications, loan amount and purpose, property type, location, lien position, term, prepay period (if any) and any applicable state law;
• Points : 2 to 10 points charged, depending on the investor, loan amount and purpose, borrower qualifications, property type, location, lien position, term, prepay period (if any) and any applicable state law;
• Fees : processing, underwriting, title insurance, escrow, doc prep, recording, wire transfer, title messenger, survey, and other fees also apply when applicable. Appraisal fee, where required, is prepaid by borrower C.O.D. at the time of service.

The right properties for Hard Money loans

• Owner-Occupied Single Family Residences, condos, townhomes -- No mobile homes or manufactured homes on leased land
• Second Homes, Vacation Homes, Investment Properties
• Land (raw and finished, residential and commercial)
• Apartment Buildings
• Mobile Home Parks
• Office and Medical Buildings
• Warehousing and Storage Facilities
• Single and Multi-Unit Retail
• Industrial & Automotive
• Mixed-Use & Unique Properties
• Hotels and Motels
• Single Family, Condo, and PUD Developments
• Resorts, Golf Courses, and Athletic Clubs
• Restaurants & Taverns
• Dry Cleaners
• Car Washes