Hard Money Loans Can Deliver Easy Financing
If you’ve ever considered making a fix-and-flip investment in a home, you’ve likely heard of a hard-money loan before. These unique mortgages are designed as temporary loans that help clients get fast financing to purchase a home with the intention of reselling it for profit within a short period of time. Hard money loans are an asset-based loan that relies heavily on the value of the home being financed as collateral rather than on the financial worthiness of the borrower. Hard money loans come at a price, but for certain situations they can jumpstart amazing investment opportunities. The Pacific Mortgage Exchange, Inc., professionals specialize in hard money loans and other unique loan solutions. Whether you are a long-time rehabber or a first-time flipper, we can help. Contact us about homes in Palm Desert, Palm Springs, San Bernardino, Riverside, Coachella Valley, and nearby California communities.
Hard-Money Lenders Offer Flexibility and Speed
Hard money loans come from private lenders rather than banks. They originated in the United States in the mid-20th Century when the credit industry was beginning to modernize. These loans can be used to purchase homes or businesses and are usually secured for investment property.
Most conventional mortgages – those that aren’t insured through the federal government – place high value on a borrower’s credit score and financial standing as part of their approval process. Hard money loans, in contrast, are underwritten and approved based heavily on the value of the property that is being financed. In the unfortunate event that a hard money borrower fails to make payments, the property will be seized to repay the remaining debt.
Hard money mortgages are not regulated by most state and federal laws, which has some benefits and some cons. One benefit is that hard money lenders can finance a broad range of clients and provide an even broader range of financing choices without interference from outside agencies. One downside of this lack of regulation is that lenders take on a much higher risk for private money loans than they do for loans backed through the government like FHA loans.
Approval Basics for Hard-Money Loans
While hard-money loans have no baseline restrictions or rules, most hard money loans are only available for a loan-to-value (LTV) ratio of 70% or lower. That is, clients should be prepared to put down a down payment of 25% or more (the more, the better). Additionally, the home or other property that will be financed will undergo a property inspection and appraisal.
If you are a house flipper, contractor, real estate investor or other type of client interested in hard-money loans, you’ve come to the right place. Contact Pacific Mortgage Exchange, Inc., to schedule a complimentary consultation about your options. We work with clients locally in Palm Desert and serve clients in surrounding Palm Springs, San Bernardino, Riverside, and Coachella Valley, CA.