Hard Money 101: Everything You Need To Know About Getting Started With Hard Money Loans

When you hear the words “hard money loan” (or “private money loan”) what’s the first thing that goes through your mind?

Shady looking lenders who conduct their business in dark alleys and charge sky-high interest rates? In prior years, some bad apples tarnished the hard money lending industry when a few predatory lenders were attempting to “loan-to-own”, providing very risky loans to borrowers using real estate as collateral and intending to foreclose on the properties. Luckily, these types of hard money lenders don’t exist in today’s market, although some residual stigma remains for some real estate investors who haven’t recently utilized the services of a reputable hard money lender.

In this article we will go over the basics of hard money loans, including:

  • What hard money loans are all about.
  • The types of properties and deals hard money loans are appropriate for.
  • What kind of interest rates and loan to value ratios to expect.
  • Standard requirements of the borrower.
  • Where to find an experienced hard money lender to work with.

What is a Hard Money Loan?

A hard money loan is simply a short-term loan secured by real estate. They are funded by private investors (or a fund of investors) as opposed to conventional lenders such as banks or credit unions. The terms are usually around 12 months, but the loan term can be extended to longer terms of 2-5 years. The loan requires monthly payments of only interest or interest and some principal with a balloon payment at the end of the term.

The amount the hard money lenders are able to lend to the borrower is primarily based on the value of the subject property. The property may be one the borrower already owns and wishes to use as collateral or it may be the property the borrower is acquiring.

Hard money lenders are primarily concerned with the property’s value rather than the borrower’s credit (although credit is still of some importance to the lender). Borrowers who cannot get conventional financing due to a recent foreclosure or short sale can still obtain a hard money loan if they have sufficient equity in the property that is being used as collateral. When the banks say “No”, the hard money lenders can still say “Yes”.

Property Types for Hard Money Loans

A borrower can get a hard money loan on almost any type of property – including single-family residential, multi-family residential, commercial, land, and industrial.

Some hard money lenders may specialize in one specific property type such as residential and not be able to do land loans, simply because they have no experience in this area. Most hard money lenders have a specific niche of loan they are most comfortable with. Ask them upfront which type of loans they are willing and able to do.

Many hard money lenders will not lend on owner-occupied residential properties due to the extra rules and regulations (thanks Dodd-Frank!) but there are those who are willing to wade through the paper work with the borrower. All hard money lenders will do loans in 1st position, while fewer will do 2nd position due to the increased risk for the lender.

What Types of Deals Should Hard Money Loans Be Used For?

Hard money loans are not appropriate for all deals. When purchasing a primary residence with good credit, income history, and there are no issues such as a short sale or foreclosure, conventional financing through a bank is the best way to go if the borrower still has time to go through the lengthy approval process required by a bank. Hard money is your source of financing when banks are not an option or the loan is needed in a short period of time.

Hard money loans are ideal for situations such as:

  • Fix and Flips
  • Land Loans
  • Construction Loans
  • When the Buyer has credit issues.
  • When a real estate investor needs to act quickly.

Who Should Use a Hard Money Loan?

Real estate investors choose to use hard money for many different reasons. The main reason is the ability of the hard money lender to fund the loan quickly. In most situations, hard money loans can be funded within a week. Compare that to the 30 – 45 days it takes to get a bank loan funded. The application process for a hard money loan generally takes a day or two and in some cases, a loan can be approved the same day. Good luck hearing back about a loan approval from your bank within the same week!

The ability to obtain funding at a much faster rate than a bank loan is a significant advantage for a real estate investor. Especially when the real estate investor is trying to acquire a property with many competing bids, a quick close with a hard money loan will get a seller's attention and set their offer apart from the rest of the buyers offering slow conventional financing.

Another reason a borrower may choose to use a hard money loan is that they have been rejected by the banks for a conventional loan. Life doesn’t always go as planned. Short sales, foreclosures, credit issues… they happen. Another important thing banks need to see is income history. If a potential borrower recently started a new job, the bank may deny the loan request due to insufficient income history, even if the borrower makes a healthy income. Hard money lenders are able to look past these issues as long the loan be repaid and the borrower has enough equity invested in the property.

Interest Rates and Points for Hard Money Loans

The interest rates and points charged by hard money lenders will vary from lender to lender and will also vary from region to region. For example, hard money lenders in California generally have lower rates than other parts of the country since California has many hard money lending firms. Increased competition leads to a decrease in prices.

Hard money lenders take on more risk with their loans compared to a conventional bank loan. Due to this higher risk involved on a hard money loan, the interest rates for a hard money loan will be higher than conventional loans. Interest rates for hard money loans range from 10 – 15% depending on the specific lender and the perceived risk of the loan. Points can range anywhere from 2 – 4% of the total amount loaned. The interest rates and points may vary greatly depending on the loan to value ratio.

Hard Money Loan to Value Ratios

The loan amount the hard money lender is able to lend is determined by the ratio of loan amount divided by the value of property. This is known as the loan to value (LTV). Many hard money lenders will lend up to 65 – 75% of the current value of the property. Some lenders will lend based on the after repair value (ARV) which is the estimated value of the property after the borrower has improved the property. This creates a riskier loan from the hard money lender’s perspective, because the amount of capital put in by the lender increases and the amount of capital invested by the borrower decreases. This increased risk will cause the hard money lender to charge a higher interest rate.

There are some hard money lenders who will lend a high percentage of the ARV and will even finance the rehab costs. This may sound great from the borrower’s point of view to begin with, but these types of loans have a much higher risk involved and the interest rate and points will be MUCH higher. Expect 15 – 18% interest and 5 – 6 points when a lender funds a loan with little to no down payment from the borrower. In some cases, it may be worthwhile for the borrower to pay these exorbitant rates in order to secure the deal if they can still generate profit from the project.

Borrower Requirements for Hard Money Loans

As discussed earlier, hard money lenders are primarily concerned with the amount of equity the borrower has invested in the property that will be used as collateral. They are less concerned with the borrower’s credit rating. Issues on a borrower’s record such as a foreclosure or short sale can be overlooked if the borrower has the capital to pay the interest on the loan.

The hard money lender must also consider the borrower’s plan for the property. The borrower must present a reasonable plan that shows how they intend to ultimately pay off the loan. Usually this is improving the property and selling it or obtaining long-term financing later on.

Finding a Hard Money Lender to Work With

There are many different ways to find a reputable hard money lender. One easy way to find a local hard money lender is to search Google for [your area] + “hard money lenders”. There will be individual companies in the search results as well as lists of hard money lenders compiled by others. This will provide a good amount of lenders to begin contacting and evaluating.

Another way to find a hard money lender is by attending your local real estate investor club meeting. These club meetings exist in most cities and are usually well-attended by hard money lenders looking to network with potential borrowers. If no hard money lenders are present at the meeting, ask other real estate investors if they have a hard money lender they can recommend. Real estate brokers, conventional mortgage brokers and other real estate professionals may be able to refer an experienced hard money lender. Leverage your existing network and see who is most recommended.

Once a list of a few lenders has been compiled, it’s time to start contacting them and finding the most suitable lender to fund your next deal.

Conclusion

Hopefully this article has armed you with enough knowledge and confidence to consider a hard money loan to fund one of your future real estate deals. The higher interest rates may seem scary at first, but the benefits of getting a loan funded quickly and being able to obtain financing when all the banks have said “No” will far outweigh the extra cost.

DonHenselDon Hensel has been involved in the hard money lending business since 1979. North Coast Financial and its affiliates have funded over $750 million in hard money real estate loans in California. These loans have been secured by single family residences, multi-family residences, commercial buildings and land. Don received his B.S. degree in finance from the University of Illinois and his M.B.A. degree in finance and accounting from Northwestern University.

North Coast Financial, Inc. is a hard money lender in San Diego, California with 35 years of experience lending on properties throughout Southern California. For more information on our loan programs or to inquire about a loan please contact Don Hensel.

don@northcoastfinancialinc.com 760-722-2991

Join the discussion 76 Comments

  • Jordan says:

    Great look at hard money loans. It’s important to know what you’re getting into and what it means if you’re looking at hard money loans – especially how they work and what they mean for both the borrower and lender. Thanks for sharing!

    • Seth Williams says:

      Absolutely Jordan, thanks for your comment and for stopping by!

      • Cory Groot says:

        Good day all I have a hard money loan for my home.
        (I pay $800 per month)
        7years on 70,000 @ 7%..
        How much money will I still owe after 7 years? I don’t understand please help. Thanks corygroot

        • Antonio says:

          Look online for what is called an amortization calculator. Enter the information and it will give you the answer. Try this one.
          http://bretwhissel.net/amortization/ it will allow you to enter payment amount and number of payments and show you the remaining amount as what’s called a balloon payment. All of these details were defined in your contract also.

    • Laura Lacrosse says:

      How do I become a hard money lender?

  • Justin says:

    Good information. I’d be interested to know how hard money deals for raw land compare to typical SFR flip loans. I expect that the terms would have to be longer due to the likely slower process of selling land. Is it financially realistic to get a hard money loan for land?

    • Seth Williams says:

      Hi Justin, that’s actually a great question (maybe our author will chime in with some feedback). I’d have to think these would be doable for most hard money lenders, but only if there is an obvious abundance of value to the land beyond the shadow of a doubt, especially since the collateral value is such an important aspect of these loans.

    • Don Hensel says:

      Hi Justin,

      It is possible to get a hard money land loan but many hard money lenders won’t do them due to the increased risk and because not as many hard money lenders are familiar with land loans. If the land has been improved (road access, utilities, etc.) and the borrower plans to build on the property this will increase the likelihood of obtaining a hard money loan. Loan to value ratios on land loans are lower than for SFR, up to 50% LTV. It is even more difficult to get a hard money loan on raw land.

      The loan term for land wouldn’t have to be longer. The ideal scenario for a lender would be the borrower quickly developing the land and then selling it in order to payback the loan.

      Please let me know if I can answer any other questions.

      • Nina Johnson says:

        This sounds so scary did I understand that the loan is for a couple years and then a large payment is due

        • Seth Williams says:

          That would be the importance of having a secondary source of financing lined up if you aren’t able to make the balloon payment. The hard money loan is effectively just a bridge loan. 🙂

    • Seth Williams says:

      Per Don’s comment, I think part of this is attributable to the fact that land can be exceedingly difficult to value when it’s not an “improved” property (beyond it’s raw state). More on that here. Land also generally has a smaller pool of buyers on the market, which makes it a bit more difficult (though not impossible) to liquidate quickly. I think if you could prove that your purchase price is FAR less than it’s potential market value (say, 10% – 30% of market value), you’d probably have a better shot at finding financing… either from a hard money lender or even a private investor… but then again, if you can get it that cheap, chances are you might just be able to buy it with you cash in hand.

      Again – great question. Thanks for the dialogue Justin!

  • Justin says:

    Thanks Don and Seth for the comments. If there are any hard money lenders out there who deal in raw land, I would be interested to hear what kind of terms are typical.

  • Steven - Real Estate Investment says:

    My business specializes in hard money loans, and this is an article that I can really appreciate. Thank you for writing this article!

  • Matt Mortensen says:

    Awesome info! I thought I needed a pof from my hard money lender to make an offer but I can just submit earnest money. Thanks!

  • Johnson McGee says:

    I like how you said, “Leverage your existing network and see who is most recommended”. My friend knows some people in this area. I’m going to have him talk to them about getting a loan. I’ve been wanting a new guitar for some time now. How much should I ask for?

  • Breanna dunn says:

    Hi Seth,
    Thank you for such an informative article. My question is this: what should you avoid when looking for a private lender? Also, when using a private lender how are the funds usually distributed? Cashier’s check? Direct deposit to your account?
    Thanks!

    • Seth Williams says:

      Hi Breanna, thanks for checking out the article! That first question is a little broad (so I’m not exactly sure how to respond without writing an entirely new article :). As for your second question, the funds would usually be advanced to the title company or closing attorney, who would then advance it to the seller once all the closing documents have been completed (not unlike a typical, conventionally financed real estate transaction).

  • James Bergman says:

    I think getting a hard money loan to finance construction, flips, etc. is a good idea. It will always be a risk, but I think that in these situations the risk isn’t all that high. Since a developers idea is to make a profit off of the land he buys there isn’t a whole lot of chance he won’t be able to pay back the loan. That is if he has done good research on the land beforehand and is confident the sale will pay off.

  • Tara Allen says:

    Getting your short term loans secured by real estate is a good way to stay secure. I like that short term loans are often paid off in a 12 month period. I am glad to know that short term loans can still accumulate interest over time.

  • Joseph Chan says:

    Has anybody worked with Fund That Flip for financing or investing?

  • Ruth Month says:

    Awesome post! I wanted loan for construction purpose but conventional money lending process would have wasted much of time and I wanted it as soon as possible. So i opted for hard money loans. I had many confusions about the entire process but the this post was of great help. Now I’m definitely looking for some hard money lenders.Thank you.!

  • Jason says:

    Seth, lets say ive been able to save up $125k over the last ten years and now im ready to begin loaning it out by “partnering” with a private lending firm such as yours, rather than opening my own business. Is this a service that you offer? Is this a typical service offered by lending firms across the country? How would I go about becoming an investment “partner” in this manner? Should I simply walk into the local lending firm in my area and tell them ive got $125k to loan, or…?

    • Seth Williams says:

      Hi Jason – there are probably people out there who do this, but it’s not something I’ve been doing in my business.

      One site you might want to check out is RealtyShares. If you’ve got money that you want to either lend, or use to own a portion of a larger real estate investment, they’ve got a great platform that makes it VERY easy to make this happen.

  • Kendall Ryder says:

    It is a good idea to ask right up front what loans the lenders are willing to do.That way you don’t have to get far into the process before you realize that particular lender won’t work for you. Having good communication is always a good thing, especially when it comes to something as important as loans. I don’t think anyone wants to screw anything up that has to do with money!

  • Kendall Everett says:

    I would have never considered using a hard money loan to flip homes. It makes sense to use it when you need money quickly and for a short period of time. It may help to contact a hard money lender before you begin looking at houses to flip so you are prepared to get the loan sooner.

    • Seth Williams says:

      Thanks for sharing your thoughts Kendall! I’ve never used a hard money lender either, but I think there are definitely some situations where it makes a lot of sense.

  • Small cash loans nz says:

    The amount the hard money lenders are able to lend to the borrower is primarily based on the value of the subject property. The property may be one the borrower already owns and wishes to use as collateral or it may be the property the borrower is acquiring.

  • lynn miller says:

    I do flips. I’ve been using hard money for several years. My lenders loan the price of the house plus the cost of rehab. Provided the ARV is worth it. The process goes like this: Find a house, check out the lowest comps (sold and listed), have your general contractor take a look at the house and give you an estimate of the rehab costs-add 20% to that number for safety.
    1) Combine the totals of the cost of the house and the rehab. Include any other expenses such as liens, taxes due, etc. Write that down.
    2) Take the amount of the market value BASED ON YOUR REALTORS SUGGESTION ONLY and cut that by 20%. Write that down.This is the price you will list the house for. I say this because houses that are listed below market value sell really fast and that is what you want.
    3) Now, subtract #1 from #2. If your ‘price of the listed amount’ is 75-80% above that number, you’ve got yourself a perfect deal!
    PS~NOTE: 3/4’s of the way through your rehab, list it. Have your Realtor make it clear that the home is offered at 20% below market value because it is still under construction, saving the buyers a lot of money if they get it under contract before it is complete.
    PSS~If I have a house that does not sell in it’s preliminary stage, the day it is finished I have it totally furnished on the first floor and one bedroom complete. I rent the furniture for one month from a furniture rental place-including lamps. I also keep a few totes in my garage filled with bedspreads, nick-knacks, a few flower arrangements, towels and accessories for the bathrooms, place mats and service for 4 of dishes and silverware and glasses and a centerpiece, a basket of fake fruit for the kitchen counter and bottle of empty wine with two wine glasses and fake cheese and crackers on a cutting board (got it online). I also add a canister set and a cooking utensils in a crock near the stove. Remember a WELCOME mat at the door and a pretty seasonal wreath for the front door. (Use Command Hooks). I use these same props over and over again.
    In one afternoon you can have the furniture delivered and set up for you, do some decorating from your totes and sit back and let the bidding wars happen!
    I have NEVER had a staged house stay on the market for more than 2 1/2 weeks.
    Always pay for the entire month of furnishings even if you do not use them for the whole month. Remember, it it a tax write off.
    Happy Rehabbing!

    • Seth Williams says:

      Thanks for the education Lynn!

    • Toni says:

      Hello Lynn, thanks for sharing, it is really insightful. I was wondering if you could please share information about some of the hard money lenders you have found reliable and honest in their dealings. Thanks!
      Toni, CA

    • Nancy says:

      Hi Lynn,
      I am a first time flipper and need to go the hard money route due to a foreclosure in my past (my ex husband made a bad investment deal that wound up being a Ponzi scheme).

      Do you have a hard money lender you trust that you could recommend to me? I have read so many articles about people taking advantage of newcomers to this field.

      Thank you for any help you can provide!

    • Tim Ford says:

      Hi Lynn, What lender do use.? I have a great deal on a multifamily in NY and fund’s Asap.

      Any information will be greatly appreciated.

      Thank you
      Tim

  • Amber says:

    I need a lender, do I first find a home then a lender or should I seek out a lender and prequalify so I dont waste my time finding a property then being turned down…

    • Seth Williams says:

      In my experience, it usually makes sense to get some kind of pre-qualification lined up ahead of time, just to ensure that you’re not wasting your time looking for a property when you can’t even get approved for a loan.

    • lynn miller says:

      I have been using ‘Do Hard Money.com’ for two years and have been funded for 11 properties. They have 100% financing which includes your cost to rehab. They base their short-term-lending lending on ARV (after repair value) and not your credit. They are very strict about the comps, both sold and on the market. Once you understand their process, you will be ale to figure out what is and isn’t a good deal by researching the area yourself.
      Their interest rate is a bit high, but it’s worth it for the 100% funding. Not to mention the education you’ll get from their amazing staff. I have a plan, and you should too. They fit into my plan very well. I use them for this reason: I use their money to buy, rehab and flip. The money I make on the sale goes toward my personal cash purchase of homes that I keep and rent. I have 4 rentals that I own outright so far. When I get to 10, I will stop buying rentals, save the money I make on my flips and use it to continue my flips with my own money, therefor eliminating the need for Do Hard Money any more.
      They

  • Christina G says:

    Hi,
    We have been trying to get a hard money loan through a broker. This has been a completely different process than the one stated here which makes me very nervous. We are going on almost 45 days still with no loan details!!! We are using someone who was recommended to us and it has been nothing but a stressful nightmare. Actually unsure of what to do at this point.

    • Seth Williams says:

      Sorry to hear about the difficulty Christina. I wonder if maybe you’re working with the wrong hard money lender, or if things are taking so much longer than you expected… perhaps it’s worth asking some questions about what the hold up is? If there’s some issue that the lender is running into, it might shed some light on how you can help speed up the process from your end.

      I’ve found that communication can move mountains in these kinds of situations, and most of the time it just takes a few phone calls to get to the bottom of whatever the issue is.

      Good luck!

  • Gabriel says:

    I am a private investor and have recently been approached to give a hard money loan. When talking liquid capital to repay the interest. How long should the outlook be on that? Time frame. So let’s say the scope of the project is 9 mos and interest payments are $3300/monthly. Interest would be $29.7k for the nine months. If they were to ONLY have $29.7k liquid right now, they would be at a 1/1 ratio of assets to liabilities. From a banking background, a lending requirement would at minimum require a 2/1 ratio and liquid capital would need to be $59.4k. From a hard money lending perspective is this a realistic requirement?

  • bradeyabbottloanfirm says:

    I would have never considered using a
    hard money loan to flip homes. It
    makes sense to use it when you need money
    quickly and for a short period of time. It may help
    to contact a hard money lender before you begin
    looking at houses to flip so you are prepared to get
    the loan sooner.

  • Patrick Freeze says:

    Thank you for sharing with future investors what a hard money loan is. The truth is, investing in rental property can be difficult, especially when just starting out. Though this may not be an ideal solution for everyone, it is always good to be aware of the various options available for financing property so you can reach your portfolio goals. I would love to add that things such as using current equity, partnering up, or even considering a lease with the potential to buy later, are other creative ways of financing your next investment property.

  • Tracy says:

    Starting to look for a hard money lender to finance a fixer upper multi-family, but finding that no one wants to finance a small amount..the house is listed at 35,000….any advice?

  • Terry Flanagan says:

    I have a MERS report that shows a piece of property in NY that I “abandoned” in 2009 due to market forces. The bank JUST started foreclosure. I am trying to buy an owner occupied home in Tennessee. My credit is at 810. ANy idea where I should look for a loan?

  • k says:

    i am considering investing large amount in a fix and flip. This is my first investment. I am working a deal with an experienced flipper , that in exchange for my investment he will allow me to be part of the deal and walk me through the process. and also that will allow me with 5% return and also 10% of profit return. How do I make sure I am not taken advantage of, what are the dangers of this, what kind of contract do I need ? of course he seams legit, but How exactly could this turn out bad for me? what should I look out for?

    • Seth Williams says:

      I think there is always some inherent risk in every deal (some much more than others) – so as a general rule of thumb, I wouldn’t invest any more than you can afford to lose. I’m not sure how much money you’re putting on the line for this project (if you’re talking about ALL the money needed, or just a small portion of it), or how well you know this experienced flipper… but 10% of the profit does sound a little low at first glance (without knowing any details of what you’re both contributing to the end product).

      Either way – as is true with most people’s first real estate deal, you’ll most likely learn a lot more than you earn… and that’s okay, as long as you don’t get burned in the process.

  • Austin Fernal says:

    Interesting read… I do appraisals for hard money lenders all the time, but I’ve never really read too much into their business, other than just getting them a value for a property. 😉

  • Tzvi Nussbaum says:

    Nice article. Looking to do my first hard money loan. I’ve designated a short sale listed at $2.9M, bought for 3.9M in 2007. Through “the grapevine”. I learned the bank is looking for 2M for the property. The property has been through the foreclosure process for 2.5 years. Interior needs upgrades of about $600K. Estimated value of the property will be 4M. I plan to try and get it for under 2M and get conventional financing. I then plan to move in during the renovation process then sell and move out. I do not have $600K in liquidity for the upgrades. Is this something a hard money lender would potentially do if I am also getting a conventional loan?

  • Iris Black says:

    Hey Don, first timers MUST read your article. It’s simple and explains the most critical aspects of hard money loans. Despite the higher rate, the simple process and promptness of hard money loans makes these the best option to leverage opportunities that you would have to otherwise miss.

  • Verena says:

    Hi there,

    Would you be able to give an example of a hard money loan from start to finish? I’m not very clear about all of the steps involved. Nothing to detailed, just the flow from lender to borrower and back.

    Thanks in advance!

  • Ellen Wilson says:

    I recently found a post about JB Funding giving loans at an affordable rate of 2% and i decided to give it a try after my bank denied me of a loan to improve my business and pay some other debts, luckily for me i was able to obtain a loan from JB Funding and i want to use this media to advise/say, if you are out there in need of any type of loan then you are to contact JB Funding via ( jbf_info@zoho.com ) for more info on how you can get funded fast with easy processing. I wish you all the best.

    Ellen Wilson.

  • Val Christensen says:

    I had some issues with falling behind on my mortgage… I make good money and have significant equity in my home I’ve lived in for 18 years. Now that my credit is shot I don’t have any options with my existing mortgage company or other refinance options with the banks or other lending institutions.
    In my situation, would a hard money loan be a good option for maybe a year to bring up my credit score and then look to refinance at better rates??
    I’m also curious if the interest paid remains tax deductible as with a typical mortgage??

  • Antonio Dowell says:

    We are building our second custom home. Getting a construction loan these days is nothing like it was in 2003. This time (last fall) it was a months-long nightmare. We owned a $250k lot free and clear. We have excellent credit. Doesn’t matter. All the comps in our area since last April were short sales. Read that: banks won’t lend even close the the materials/labor costs in this area.

    We ended up having to come up with a boatload of cash just to get this going.

    We did a one-time close, particularly because we were very unsure if the rates would sky rocket in the coming months.

  • Valerie R. Belcher says:

    This is exactly the way that many development companies do things, so surely if you are a self builder you may as well follow their example, they will understand the industry and financing of it better than you or I could even with days and days of research. They basically already know what works!

  • chris says:

    you have made a lot of key points with a ton of information. my main question is what do fix and flippers look for when they are trying to find a hard money lender. and if you decide to buy and hold a property what should you look for then.

  • Susie says:

    I’m looking for a hard money loan. I got behind in my property taxes and need to settle before I lose my home. I owe about
    $20,000. Would there be anyway I can borrow this money. I would greatly appreciate it. I don’t want to lose my home. Can you please help.

  • rebecca says:

    This is the best article I’ve found on HMLs. Thank you for the great info!
    We are trying to purchase an REO single family home with the intent of living in it. It’s in a great neighborhood, 10-rated schools, the cheapest home in the best area. We put in an offer, knowing that it needs repairs, and we are now told by the bank’s agent that it is “cash only” because the pipes burst. They won’t accept a rehab loan. Only cash. (Sigh)

    Could we take out a HML for this type of purchase, make the necessary repairs and then get a long-term mortgage to pay of the HML? Not a flip…we wish to move into the home with our family.

    Does HML count as “cash” in this type of deal? Please advise. Newbie, here!!

    • Starr says:

      I am having a hard time understanding this because I don’t understand why the give an apt and also points. Can you please tell me how much I would expect to get on 40k for 3 mos with 4 pts and 10%pay. And if these are about right for the amount and time frame?

  • Emanuel Collado says:

    Good morning, I have a hard money loan approved for 75% of the purchase price. Looking to get the other 25% for closing.

  • Iris Black says:

    This really is Hard Money 101 Seth. I am happy that you mentioned the need for higher interest rates associated with hard money loans; they are risky as compared to the conventional loans, something that people don’t understand. Hard money loans are ideal to start a fix and flip property business with, since banks also want a certain credibility regarding past history in the business.

  • It is amazing and wonderful to visit your blog. Thank you for sharing your knowledge on hard money loan. I am looking to read more post from you.

  • Keisha says:

    Back in 2016 we had one major drawback. Hubby lost his job, I had an accident that made me quit my job as well. We collected thousands of money from our Home Equity line of credit (HELOC) account which works sort of like a credit card to raise our son through college. This caused our credit scores to drop drastically, the bank almost terminated our line of credit and at that point I almost regretted my existence in life. I am using this opportunity to say a BIG THANK YOU to my sister and her BFF she introduced to us as a credit score hacker and counselor. He cleared our HELOC debt of $142,000 and raised our scores to 765 and 758. My special thanks goes to this genius hacker, we purchased our second home a couple of weeks ago for our son. As we have promised to give him more clients if he should successfully fix our problems. We are living testimonies and confident of this miracle worker to handle all jobs, I will implore everyone facing challenges with credit scores, credit report,bankruptcy,mortgage issues to reach him on:
    pyramideye.hack ( AT outlook . com )

  • Don says:

    This is totally off base from the conversation but this is my story.I lost my job in 2010 and could not find any job that paid anywhere what I needed.Decided I would start my own business and then I suffered a stroke.Luckely with certain medicine I didn’t loose any physical ability.Almost a year to the day while building strength to get back to work I surrender a second stroke.Then a heart operation in hopes of not having a third one.Unable to work I applied for disability but it is so abused it took over 2 1/2 years.Finally got disability and had everything in place.Called Wells Fargo to apply for loan mod.(tried many times but was always told I didn’t have enough income which I knew.Even tried having someone live in basement for extra income but still told wasn’t enough.)and was told since your loan is over 3 years behind they won’t even offer me a chance to save home.Now facing foreclosure sale and don’t know what to do to save home.Could I get a hard money loan?

  • José L. Vivanco, Sr says:

    What do points mean? Could you please explain? Thanks.

  • Kenya says:

    Hello if I’m still in bankruptcy can I get a hard money loan for a fix and flip property and use my house as collateral .

  • Tim Ford says:

    Hi, What lender do you use.? I have a great deal on a multifamily in NY and need help to fund this deal Asap.

    Any information will be greatly appreciated.

    Thank you
    Tim

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