Hard Money Lender Hillsborough County

Hard money lenders differ from banks in that they are asset-based, private lenders. They focus less on a borrower’s credit history and more on the property’s value when making lending decisions. As a result, the underwriting process is concise, offering quick closings and loan availability sometimes within a week—a stark contrast to the months usually required by banks. This rapid funding is crucial for real estate investors, such as those buying properties at foreclosure auctions, who need to meet tight deadlines. Hard money lenders provide solutions for properties that do not meet bank standards, for instance, those without a Certificate of Occupancy. Furthermore, these lenders serve clients with poor credit or those aiming to improve their credit situation, ensuring that a low credit score isn’t a barrier to securing a loan. They’re also an avenue for refinancing and cashing out on real estate investments.

Hard money lenders exclusively provide loans for investment real estate and do not offer mortgages for residential purposes. Properties financed by hard money lenders are intended for investment purposes only and cannot be used as primary residences.

Borrowers who choose hard money loans benefit from the expedited application and funding process, as opposed to traditional bank mortgages, but it’s important to note that this comes with a premium in the form of interest rates between 10-12%. At the outset, these loans also attract 1 to 3 points at closing. The terms are short, usually just a year or two, and comprise two funding stages: one for purchasing the property, accounting for 65-85% of the buy price, and another for any necessary refurbishments, where up to 100% of costs can be covered by the lender. Renovation financing is awarded only when required and paid out in stages following the completion of work. For example, in a scenario where $50,000 is allocated for repairs, the borrower will receive funds in increments, like $15,000 upon completion of each phase of the work. Furthermore, the combined total of the purchase and renovation funds granted by the lender is capped at 65% of the property’s value once repairs are done, known as the “ARV” to maintain a conservative lending approach.

Commercial loans, such as hard money loans, are not available to individual borrowers, but rather to legally formed LLCs. Thankfully, forming an LLC is a fairly simple and quick process, even for just one person.

Hard money providers scrutinize the offer price of an asset along with its estimated ARV to guarantee a return on their loan. The likelihood of loan approval increases significantly if the asset’s price does not exceed market value. Should the loan request include funds for renovations, lenders closely verify if the makeover matches the planned schedule. It’s necessary for the property, or the LLC in question, to be free of legal impediments before any loan transaction.

Ensuring the borrow’s success is tantamount to the lender’s principle, as it guarantees that the loan not only gets covered but also presents a worthwhile investment opportunity for the borrower.

A hard money loan is typically utilized in the following situations:

• Utilize hard money for rapid fix and flip property ventures, ideal for quick overhauls and sales.
• Repair and rent homes with hard money loans, followed by bank refinancing once it’s rent-ready.
• Achieve urgent property buys with hard money, suitable for auctions with tight deadlines.
• Benefit from hard money’s swift approval to fund property deals much quicker than banks.
• Access fast refinancing with your asset as collateral through hard money lending.
• Handle impending mortgage deadlines with ease, thanks to quick refinancing options from hard money lenders.
• Invest in LLC properties without bank limitations, courtesy of hard money financing.