When it comes to real estate investing, traditional loans may not always be the right fit. That’s where hard money loans come in. With PierPoint Mortgage, you can get the financing you need for your next project without the lengthy traditional approval process.
Our team of experienced hard money mortgage brokers understands the unique needs of real estate investors and developers. With flexible terms, competitive rates, and a quick turnaround time, we can help you take advantage of time-sensitive investment opportunities and turn your real estate dreams into a reality.
Whether you’re a seasoned investor or just getting started, our hard money brokers can help you finance your real estate projects. Unlock the potential of your real estate investments and take your portfolio to the next level.
Hard money loans are a type of short-term financing that is typically used by real estate investors and developers. These loans are usually issued by private hard money loan companies, rather than banks or other traditional lending institutions.
They are often referred to as “hard” loans because they are backed by collateral, usually in the form of the real estate property being purchased.
The terms of hard money loans are generally more flexible than traditional loans, with higher interest rates and shorter repayment periods. They are often used to fund projects that traditional lenders might not be willing to finance, such as fix-and-flip renovations or other high-risk ventures.
When applying for a hard money loan, you will need to provide information about the property, including its current market value and potential future value after renovations or improvements. The hard money mortgage lender will use this information to determine the LTV ratio and loan approval.
If approved, you will typically receive the funds within a matter of days, unlike traditional financing, which can take weeks or months. You will then make monthly payments on the loan, typically with a higher interest rate than traditional loans.
In the event of default, the lender can seize the property being used as collateral and sell it to recoup their investment. Therefore, it’s essential for you to have a solid repayment plan and a clear understanding of the terms and risks associated with hard money loans.
The specific requirements for hard money loans can vary depending on the lender and the nature of the project, but some common requirements include:
Collateral: Hard money loans are backed by collateral, usually in the form of the real estate property being purchased. The lender will want to assess the value of the collateral to determine the loan-to-value ratio.
Equity: You must have some equity in the property being purchased, typically at least 20% to 30%.
Credit score: While credit score is not always a primary factor in hard money lending decisions, some lenders may require a minimum credit score to qualify.
Proof of income: You may be required to provide proof of income or assets to demonstrate your ability to repay the loan.
Exit strategy: Hard money loan lenders will want to see a clear exit strategy for the loan, such as a plan to sell the property or refinance the loan within a specified period.
Appraisal: Hard money lending companies may require an appraisal of the property to determine its current and potential future value.
It is important to note that hard money loan lenders may have more flexible requirements than traditional lenders. Additionally, they may also charge higher interest rates and fees to offset the higher risk associated with these loans.
There are several reasons why someone might choose to use a hard money loan instead of traditional financing:
Speed: Hard money loans can be approved and funded much more quickly than traditional loans, often within a matter of days. This can be especially important for time-sensitive projects, such as fix-and-flip renovations or short-term investments.
Flexibility: Hard money lenders are often more flexible than traditional lenders when it comes to the terms of the loan, including the interest rate, repayment period, and other conditions. This can be helpful for those who have unique needs or circumstances.
Credit History: Hard money lenders are primarily concerned with the value of the property being used as collateral rather than your credit history. This means that even with poor credit or limited credit history, you may still be able to qualify for a hard money loan.
Investment Opportunities: Hard money loans can be a good option for real estate investors who are looking to fund high-risk projects that traditional lenders might not be willing to finance.
Short-term Needs: Hard money loans are typically designed for short-term use, such as a few months to a few years. This can be beneficial for those who need financing for a specific project or investment but do not want to be tied to a long-term loan.
Note: Hard money loans generally come with higher interest rates and fees. You should carefully consider your options and make sure you have a solid repayment plan in place.
Hard money loans are expensive with high interest rates and fees, and you risk losing collateral if you can’t repay the loan.
Hard money loans are used for time-sensitive projects, by those with poor credit, or to fund high-risk projects that traditional lenders may not finance.
Credit score requirements vary, but hard money lenders are typically more concerned with the value of the collateral than your credit score.