Hard money loans lend on the asset, such as the property or loan, and are intended as short-term loans. For real estate investors looking to fix-and-flip a residential property, land, or commercial building, hard money loans can be the ideal financing solution. Essentially, anyone looking to receive financing for a property that they will be holding onto for a limited period of time can benefit from a hard money loan.
So, is a hard money loan right for you? There are actually several advantages to hard money loans that traditional lenders are unable to provide when it comes to financing your rehab project.
Benefits of Hard Money Loans
The benefits of hard money loans include:
Minimal Requirements for Approval:
Unlike traditional mortgage loans, hard money loans have very few approval requirements. Furthermore, a high credit score is not required for a hard money loan. So even if you have a low credit score or a foreclosure in your history, we might still be able to work with you on securing your hard money loan.
A primary factor for obtaining a hard money loan is meeting the down payment requirement. The down payment serves as collateral for your loan and can range from 10% to 40% depending on the specific type of property. These down payments are calculated based on the Loan-To-Value (LTV) ratio of the property. Here’s an example: To purchase a residential property for $100K, and the LTV ratio offered is 90%, then you would be responsible for the $10K down payment.
Hard money loans also typically require the following:
- Appraisal (to be ordered by West Forest Capital)
- Lender title insurance
- Insurance policy (West Forest Capital should be loss payee and additional insured)
- Builder’s risk insurance on extensive rehab projects
Provide Funding That Most Banks Cannot Offer
Many real estate investors or those looking to receive a short-term loan for a quick fixer-upper project have difficulty obtaining a loan from banks. This is due to a variety of reasons, one of which is because most banks have loan terms that are for the long-term. With many rehab projects, only a short-term loan is needed.
Traditional mortgage lenders also require some type of proof that can you repay the loan over time, and that proof is in the form of a credit score and your income. For borrowers with a high credit score who meet the income requirements, as well as with a history of paying back loans, getting approval from a traditional lender might not be difficult (but it could be a tedious process). However, for other borrowers who do not meet these conditions, it can be close to impossible to secure a loan.
Hard money loans are more accessible for a wide variety of real estate investment projects, offering short-term loans for 1 to 2 years and do not require a high credit score or specific income.
Approved and Processed Quickly
Hard money loans are processed much more quickly than with a traditional lender. In most cases, we can fund a loan request within five days.
Since hard money loans are often provided via private lenders, each loan can be addressed on a case-by-case basis. At West Forest Capital, we’re able to work with your specific needs by utilizing our extensive knowledge of the local market and come up with creative solutions for financing your rehab project.
The funding process for hard money loans with West Forest Capital is straightforward and easy to understand. We never charge hidden costs or fees.
Upfront Loan Rates and Terms
At West Forest Capital, our loan rates are as follows:
- 9.5% – 11% interest only
- Amortization option available
- 1 to 2 points origination
Our loan terms are as follows:
- First lien preferred (second can be considered)
- 1 year term
- 2 year term available
- Up to 85% of purchase price
- Up to 100% of rehab
- Total Loan amount not to exceed 70% ARV
- Appraisal must be ordered by West Forest Capital
Hard Money Loans with West Forest Capital
West Forest Capital provides funds to real estate investors and others looking to finance non-owner occupied real estate. We fund property types which include:
We provide rehab funds, or full construction costs, as needed. We also provide fast closings, almost always less than 10 days, and often as quick as 3 to 5 days. We’ve even previously closed a brand new loan in one day! We lend in New Jersey, New York, Connecticut, Massachusetts, Pennsylvania, and Florida.