Monthly Archives: November 2018

What are the Different Types of Hard Money Loans?

We all know that hard money loans are short-term loans that use real estate as collateral.  Borrowers seek out this unique type of funding for the purpose of buying and fixing up a property. These days a lot of investors use these loans buy and renovate properties over the course of about a year. These are excellent borrowing options for those who are into flipping houses, and there are a number of them to choose from. If you are interested in a hard money loan, you will need to know what your choices are.


Fix and Flip Loans

You will find that fix and flip hard money loans can come with fairly high interest rates, but they are paid back over a fairly short period of time. There are no additional fees charged for paying back one of these loans early, and doing so can reduce the amount of interest you pay. These private lender loans usually have a term of 1 to 3 years, and it takes around 15 days to get the funds. home equity cash out Interest rates can vary from 7 to 12 percent, and lender fees go from 1.5 to 10 percent.

There are certain qualifications that you will need to meet before you can get a flip and fix hard money loan. You will need a credit score of at least 550, and a debt-to-income ratio of anywhere from 35 to 45 percent. It is also important that you’re able to demonstrate experience with rehab projects or licensed contractor help. Those who have at least a couple years of experience with rehab projects will benefit the most from this type of loan. Even people without this type of experience can still get a fix and flip loan though.

Many of the private lenders who give out real estate loans are based entirely online. You can fill out an application through the lender’s website and wait to hear back. If you are approved, you should receive your funds within a couple of weeks.

Cash Out Refinance

A cash out refinance hard money loan is when someone who fixes and flips real estate refinances a current property that is in play to buy a new property as an investment. This enables investors to get maximum equity from their current property by borrowing money so they can pay off the mortgage. When the new cash out loan is given to the investor, it is referred to as a “first lien.” Any current liens, including the first mortgage, have to be paid back in full before any equity can be extracted.

The investor uses the difference between the new loan and mortgage to pay for other properties that they can flip and fix up before selling. One of the best things about this loan is that there aren’t any limitations on how the borrower can spend the money they are given by the lender. Investors are able to use a cash out refinance or “cash out refi” both owner-occupied and non-owner occupied properties for up to four units.

Cash out refi loans have a term that can range from 15 to 30 years, and it typically takes anywhere from 30 to 45 days to get approval. The interest rates for these loans can go from 2.99 to 5 percent. The loan origination fees are 3%, and the closing costs fall between 2 and 5 percent. This is a viable borrowing option for many fix and flip investors.  Many of us have traditional refinance options available such as working a mortgage company, bank or Federal Government program.  But there’s always going to be a situation where you need cash fast and that’s where a cash out refi from a private lender can help out.

Second Trust Deeds

This form of real estate financing is like a long term mortgage in many ways. As it lets the borrower get private lender funding to purchase a property by putting it up as collateral. With a 2nd deed trust, there are often a different groups involved with the real estate investment. There is person who initially, the private real estate financier, and a trustee. You will often see a title company or banking institution retain the title to the property until the loan has been paid off in full.

The laws regarding which security instruments can be used vary from state to state. A second trust deed can be either a home equity loan backed by a financial institution or a second mortgage. If someone has a second trust deed, there is already one in place that uses the property as collateral. The first trust deed acts as the original mortgage for the property.

Build to Flip

A build to flip hard money loan is a good option for experienced property investors who want to build a whole new property from the ground up. financing for commercial construction These loans are short-term and can help investors finance the construction of new properties for the purpose of later selling them. Some of the funds from this type of loan are given at the closing phase to cover the cost of lot acquisition.

The amount of the loan is based on the lot value as well as any repair or construction expenses. There is no minimum credit score that is required to obtain one of these loans, which is why they are so incredibly popular with investors. This type of loan doesn’t require a lot of paperwork, so it is a much faster process overall.  Compare different companies that provide build to flip and cash out financing in our directory.

Rental Refinance

Those who want to build up their real estate portfolio might consider getting a rental refinance hard money loan. You refinance a rental property of yours within as little as 10 days, as the process for getting one of these loans is quite expedient. There is no minimum credit score required, and it’s a great borrowing option for many people.

There are some requirements for these real estate loans that you should know about. You can only choose the rental refinance option for single-family residences with 1-4 units, and only investment properties. This is a great option for investors who want to pay off the mortgage on their investment properties at a lower interest rate. If you are having difficulties making payment on the original mortgage, this loan can certainly help. You will have to submit proof of income when applying for rental financing.

Are There Mortgage Loan Programs Available for Foreign Nationals?

This questions comes up more often than you would expect.  Many people come to our site because they were turned down for traditional real estate financing.  Some of those applicants were turned down because they don’t have an established relationship with this country.  That means they’re either new to the States or for whatever reason they haven’t been able to document a lengthy employment and credit history.  In that case their odds of There are mortgage loan plans that do exist for foreign nationals who want to buy a home. These loans offer some great borrowing opportunities, and it’s important that you learn as much as possible about them before going forward.

Credit is Not an Issue

Foreign national hard money loans do not require non-American citizens to have good credit at all. Those who aren’t citizens of the country obviously don’t have a credit score, so it’s a non-issue. Applicants will, however, be required to submit detailed information about the property they wish to purchase. These lender take a close look at the potential income that will be generated by the property when deciding whether or not to approve applicants. The more potential value your property has, the easier it will be to get your loan.

Down Payment

While you might not be required to have a credit history or official documents to get a hard money loan, you will be required to make a down payment. The size of the down payment will depend on the amount you borrow as well as the lender. It’s always a good idea to ask how much you need to pay down to get the loan. Borrowers will put down anywhere from 20-30% of the total loan.

Paperwork Requirements

Applicants are more likely to get a private money loan if they can show specific documents. For example, it’s critical to provide paperwork that proves you are staying in the country for at least as long as the loan period lasts. This can be difficult for some people to do, but it will go a long way towards increasing your chances of approval. verification requirement for direct lenders By doing this you will be giving the lender peace of mind. They will be a lot less likely to view you as such a liability if they know you are going to be in the country for a while. You are required to show your passport to get a private money loan, so make sure you have it on hand. It’s always best to stay on top of the latest requirements when it comes to your ID and passport.   Please check out the most recent State Department Guidelines for photo ID and passport requirements.  You absolutely cannot get one of these loans without a valid passport as any lender or financial institution would need to verify your identity.

Benefits of Foreign National Hard Money Loans

There are lots of benefits associated with getting a hard money loan if you are a foreign national. These loans are given out by private lenders, which means that you won’t need to submit any documents proving residency at all. If your property has enough potential value and you’re able to put down enough money, you should be able to get your money fast. These loans are known for dispersing funds a lot faster than banks and other financial institutions.

Those who are not legal citizens of the country but want to purchase a home for the purpose of flipping it should make a point of exploring this option before making a final decision. Most hard money lenders in our list will work with anyone with regards to repayment plans. You should be able to work something out with a private lender so you can pay off your loan on time and without any issues.

Find A Company In Our List Of Hard Money Lenders

Some of the online lenders in the HardMoneyList database will work with Non US Citizens looking for fast funding.  As these companies are not held to the same regulations as banks, you need to choose the one you borrow from carefully. Same goes if you’re looking for a cash out refi or commercial real estate loan.  When you take the time to research some of your lender options, you should be able to choose the right one to meet all of your needs. There are a lot of these lenders out there, and you definitely don’t want to rush into this kind of decision.

Paying Back Your Private Loan

Most private money lenders in our directory will allow 1-5 years to pay back the hard money loan you take out. One of the great things about these loans is that they usually don’t come with any prepayment penalty fees. This means that you can pay off your loan early if you can, and there won’t be any additional expense whatsoever. Keep in mind that you have to be purchasing an investment property to get one of these loans as a foreign national.