Who receives hard money loans?
All types of people in all types of situations take out hard money loans. Often, persons who simply don’t qualify for a traditional bank loan seek hard money. This could be someone with past credit problems or bankruptcies or folks who have property assets but not the income needed to obtain other types of financing. Another common recipient of hard money is someone who may be going through a difficult time and need a loan to avoid foreclosure or a refinance loan to get some much needed cash out.
Other common types of hard money borrowers are real estate investors. Often investors that are newer to the industry and unable to get approved for bank loans can get the financing they need as they build their real estate careers. Hard money loans are especially convenient for fix and flip investors seeking distressed properties below market value. Even seasoned investors find hard money loans extremely useful when they need funds fast without the hassle and time it takes to acquire a bank loan. Hard money loans are convenient, quick and can even be used as a bridge to secure property while a traditional bank loan is obtained.
What are the qualifications for getting approved for hard money loans?
Hard money loans can be approved for anyone not in active (open) bankruptcy for non-owner occupied properties. This means as long as your bankruptcy has been discharged and you are not currently living in the asset property, you can be approved.
What situations will disqualify someone from getting approved for a hard money loan?
- Open bankruptcies
- Owner-occupied properties
How are loans approved?
Hard money loans are private loans, so it’s up to the each private money lender how and to whom financing is approved. Most lenders obtain some personal and financial information from the borrower on a loan application, but the amount and type of information varies widely from lender to lender. The most important piece in the approval process is valuation of the asset property. Once the hard money lender has inspected and assessed the property the loan can be approved, often in just a few days.
At Advanced Funding Solutions we make the approval process rapid and reliable. Our loan application features minimal paperwork and once received we can approve your loan just three days and deliver your funds in as few as five.
How much money is available to borrowers of hard money loans?
Hard money loan amounts depend on the valuation of the asset property where the loan is a percentage of property value, also known as the loan to value ratio (LVR). Most hard money lenders finance anywhere from 50% LVR to 70% LVR. Each LVR is calculated individually on each specific property and is based on a number of factors including location, condition of the property and liquidity. When financing fixer-upper and flip properties, the loan to value ratio is calculated by the after repair value (ARV) meaning the value of the property after it’s been rehabbed and repaired.
At AFS, we specialize in funding a wide range of loan amounts and offer up to 70% LVR. Whether you need $50K to $5M, we can finance your project fast. For more information on your specific loan needs, check out our online loan calculator.