Hard Money Loan Borrowing Requirements
Like previously mentioned, hard money lenders are more concerned with the amount of equity a borrower has invested in a property rather than the borrower’s credit history. Credit is generally overlooked, even foreclosures and short sales tend to be ignored if the borrower has enough capital to pay the hard money loan’s monthly interest. Lenders will also want to know what the borrower plans to do with the property. They will more than likely require a reasonable plan that will show how the borrower ultimately intends to pay off the loan. Usually, this means improving or renovating the property and selling it or receiving long-term financing in the near future.
If you live in Los Angeles or Orange County, Call the professionals at RTI Bridge Loans for more information on what your specific requirements will be to fund your next project.
Why Should You Use A Hard Money Loan?
There are many different reasons why people choose hard money lenders over traditional lenders such as banks. The main reason is how quick hard money lending is able to fork over the funds. In fact, the hard money loan process usually only takes a week, whereas banks can take up to 45 days. Good luck even hearing about your application for bank funding within a week!
With hard money lenders, the application process usually only takes 1-2 days, and in many cases, the loans are even approved on the same day. This is a hugely significant advantage, and your competition will most likely not have the full funds (like you will have if approved), and they will probably lose the bid.
Another one of the more popular reasons why a borrower may choose a hard money lending is because they have been turned down by bank loan lenders. Life happens – bankruptcies, low credit, foreclosures…these are all reasons why a bank will potentially turn down your loan application. Hard money lenders look past these blemishes so long as the loan can be repaid and the borrower has a healthy amount of equity invested in their property.
Hard Money Loan Rates And Points
Points and interest rates will vary depending on the region and the lender. For example, California’s hard money lenders usually have lower rates than other parts of the country because California has a lot of hard money lending firms in every county. Higher competition means lower rates. Interest rates are typically higher than traditional bank loans because hard money lenders are taking a risk when they lend you the money for your new property.
Hard money loan rates usually range from 10-15% depending on which lender you go to. Points typically range from 2-4% of the total loan amount. Both interest rates and points may vary depending on the LTV (loan to value) ratio, which we will talk about next. RTI Bridge Loans serving both Los Angeles and Orange County can help better prepare you for what to expect with interest rates and point information.