What Is Hard Money? | Stratton Equities | United States
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what-is-hard-money

WHAT IS
HARD MONEY?

Hard Money Rates for Real Estate Investors - Nationwide Direct Hard Money Lender

A Hard Money Loan is one of the most popular Loan Programs that real estate investors utilize for their real estate investments. Regardless of the type of real estate investor you are and your loan scenario, there is an array of loan programs that are designed to meet all your mortgage needs.

 

Looking for a Hard Money Loan? Find out How to Get a Hard Money Loan with Stratton Equities.

 

What are the 3 Steps to Processing a Hard Money Loan​?

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Ready to learn more about Private Money and NON-QM Lending for Real Estate Investors? Check out our latest blog!

Where can you receive a Hard Money Loan?

Stratton Equities provides hard money loans nationwide to Real Estate Investors around the country.

Hard Money Lender for All U.S. States

  • Kansas

  • Kentucky

  • Louisiana

  • Maine

  • Maryland

  • Massachusetts

  • Michigan

  • Minnesota

  • Mississippi

  • Missouri

  • Montana

  • Nebraska

  • New Hampshire

  • New Jersey

  • New York

  • New Mexico

  • North Carolina

  • Ohio

  • Oklahoma

  • Oregon

  • Pennsylvania

  • Rhode Island

  • South Carolina

  • Tennessee

  • Texas

  • Utah

  • Washington

  • West Virginia

  • Wisconsin

  • Wyoming

What is a Hard Money Loan?

A true Hard Money Loan is an asset-based loan, which means the financing is based on the loan-to-value (LTV) of the Asset. Unlike the Fix and Flip loan, it doesn’t go through full underwriting and there’s no minimum FICO requirement for the borrower, as it doesn’t have many guidelines and criteria. (Although your credit report score does not matter, you will still need to obtain a credit report.)

 

This type of loan doesn’t have as many restrictions as one might think considering that it’s just money, so no more having to worry about bankruptcies, foreclosures, collections, etc.

 

Due to the lack of guidelines and underwriting, a true Hard Money Loan is generally capped at 75% LTV or less. For example, let’s say you have a home worth $1M, if you want $500K against it (50% LTV), you’re able to receive the money within 1-2 weeks (from the day of application), commonly as a first lean position - because it’s just money. It’s normally in the form of a Bridge Loan, which is short-term financing in a period of 12-24 months.

 

One of the reasons why Hard Money Loans are for investment properties ONLY, is due to the high-cost regulations and predatory lending – you can’t put such high interest rates and cost on an owner-occupied property.

 

In certain states, there are non-judicial foreclosure laws, which allow a Hard Money lender to get their money back quickly if the borrower defaults on the mortgage.

 

These foreclosure laws make the lender more comfortable doing high-risk loans, usually the money is not sold on the secondary market – the lender holds the note, and they don’t sell the paper.

Why Should You Use a Hard Money Loan?

The main reason for Real Estate Investors to use a hard money loan is the ability of the private lender, like Stratton Equities, to fund the loan quickly. With Stratton Equities, a hard money loan can be funded within two weeks, compared to the 30 – 45 days it takes to get a bank loan funded.

 

Also, borrowers may choose to utilize a hard money loan, because they have been rejected by the banks for a conventional loan because of bad credit, insufficient income history, foreclosure, etc. As Stratton Equities is a Hard Money Lender, we can look past these issues as long the loan is repaid and the borrower has enough equity invested in the property.

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Once a borrower has a property and is interested in applying for a hard money loan, the application process takes a day or two and in some cases, a loan can be approved within 24 hours.

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Real estate investors choose to use hard money loans for many different reasons; it's fast, flexible, and functional. For the top 3 reasons to use a Hard Money Loan, watch our Top 3 Reasons to Use Hard Money Video.

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How Do You Benefit from working with a Private Money Lender and Asset Based Lending?

Conventional Financial Institutions and Traditional Mortgage lenders rely on proof of employment, tax documentation, and credit score.

 

A Hard Money lender works with asset-based finance loans and bases loan approval on the value or potential for the value of a property, making this idea for real estate investors who might be self-employed, have poor credit, or have other circumstances that make traditional mortgage approval difficult. Approval is based on the Loan-to-Value Ratio (LTV), which compares the loan amount to the value of the property.

 

This makes the approval process quick and easy, making it a great fit for investors who want to close quickly on a property.

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Should You Work with an Asset-Based Lender?

Asset-based lending allows Private Lenders to provide more types of real estate investors with loans that fit their unique situations. Rather than simply assisting those real estate investors who are eligible for traditional loans, you can also help investors who are interested in purchasing an investment property that cannot be approved for a traditional loan.

 

Not only does working with a Private lender allow you to close deals on a fast timeline, but also improves their satisfaction because they know you can help them get approved for a quick loan that will fund their investment, no matter their situation.

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Found an investment property and interested in applying for a loan?

How Can I Get Started Working with a Private Money Lender Today?

Getting in touch with Stratton Equities to discuss working together to offer loan options is a fast and easy process! We are excited to speak with you and discuss mutually beneficial options.

 

Contact Stratton Equities to figure out the best working relationship for you and your business! One of our top loan officers will be in contact with you within 24 hours!

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