A Guide to Hard Money Lending
When it comes to home financing, not everyone meets the approval requirements associated with conventional lending contracts. Hard money lenders really are a unique funding option commonly considered by real-estate investors, both new and seasoned.
In this week's blog, we'll look at hard money FAQs commonly asked in our lending professionals at Associates Mortgage loan of Florida, Inc., and hopefully dispel some misinformation you may have heard. As you prepare to explore these and other lending solutions for sale in Tampa Bay, or nearby Florida, e mail us to get started.
What documentation do I need to offer a hard money loan?
Answer: Hard money loan approval depends on the need for the home being financed. Generally, they might require less paperwork from the borrower than conventional loans.
However, there are several documents that you should be ready to supply, with respect to the unique terms of your hard money contract. They include:
- Documentation from the potential property's value you want to purchase
- A clear financial plan for the investment and projections for growth
- Proof of the ability to create a deposit covering from 30-40% of the home value
- Minimal documentation regarding your personal finances such as pay stubs, bank statements or tax paperwork
How long will it decide to try get approval for any hard money loan?
Answer: Using the proper documentation on hand, we are able to provide pre-approval for hard money lenders in as little as each day. Each case is unique, obviously, however these funding solutions are well-known for their quick turnaround to assist clients move on exceptional opportunities, fast.
What kind of property can be bought having a hard money loan?
Answer: Our clients use their hard money financing to purchase single- and multi-family residential homes, commercial property, homes in need of renovations, undeveloped land, and even industrial properties.
Do hard money loans also have very high interest rates?
Answer: It's no secret that hard money, private money, and other options to traditional financing normally have higher interest rates than conventional loans. That's why it's important to make use of a mortgage professional, like those at Associates Home Loan of Florida, Inc., that has connections with several top lenders.
When lenders compete for the business, this drives lower interest rates. Even still, you should know very difficult money loans ought to be used almost just for short-term investments. This is especially true when they have adjustable rates that may become very volatile in a nutshell time.
How much can one borrow against the value of a good investment property?
Answer: Hard money loans don't have any upward limit since they're fully funded by eco-friendly. For homes within the millions, Hard money lenders typically won't provide more than 75% of the loan-to-value (LTV) ratio on a property. That is, the borrowed funds amount divided by the value of the property.
This means you will need to come up with a deposit of 25% or more. If you're planning to make renovations to some property, you may be able to receive funding in line with the LTV for the estimated value of the property post-repair, known as the after-repair value (ARV).
We Find Lending Solutions
Our mortgage professionals are here to obtain the best-suited financing solutions for each client. At Associates Home Loan of Florida, Inc., we can agree when big banks say no. If you are interested in purchasing a good investment property having a hard money loan or need more answers to hard money FAQs, e mail us to schedule a complimentary consultation. We help clients in Orlando, Tampa, Sarasota, and surrounding Florida.