Questions on Hard Money Loans
Category : Hard Money Loans
Q 1 What Loan-to-Value are Hard Money Lenders looking for?
Typically a loan does not exceed 70% of the after-repaired-value (ARV). This figure is calculated by an appraiser and consideration of repairs.
Q 2How long is the loan for?
Typically write the notes from 3 months to 12 months depending on the Lender and your needs. Longer the term can lead to increased costs or interest rate.
Q 3 what are the costs?
All loans will require Title Policy, Insurance, and Appraisal. These services come with fees that can range from a few hundred to a couple of thousand dollars. Most require origination points ranging from 2 to 10 points.
Q 4 Do I need to put any money down?
In most cases, Yes Most lenders want to ensure that you have enough resources to finish the repairs and cover the costs of the loan plus any surprises. Expect to pay all origination/discount points and other costs at or before closing. If you cannot afford to close you typically cannot afford to take out this type of loan.
Q 5 How does Hard Money compare to a traditional non-owner occupied investor loan?
This would be like comparing apples to oranges. Hard Money has a very specific purpose. Typically these loans are for quick turnaround or after repair situations. Conventional financing is used for your traditional rentals and long term hold scenarios. As the foreclosure market increase you will find investors to use Hard Money as way to secure the property in a short period of time then refinance into Conventional finance.