Ultimate Guide to Hard Money Lending for Mortgage Brokers

Nov 24, 2021 | Blog

If you have never considered working with a hard money lender for your customers, now is the time. A hard money lender can considerably increase the range of borrowing options for your customers — especially those with unique or challenging situations. With the right hard money lender, building a relationship is just as important to them as the deals. The right lender will respect your time and be honest and open, and they’ll look for you to do the same. In this mortgage broker guide to hard money, we’ll explain what these loans are, which types of borrowers should use them, and how to team up with the right lender for a valuable partnership.

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What is a hard money loan?

Hard money loans are made by private investors or companies. They provide a way to borrow loans without using traditional mortgage lenders such as banks, and they do it fast.
Hard money lenders are focused on the merits of the deal above all else. They use common sense to evaluate deals rather than the strict documentation required from traditional lenders. This provides flexibility to borrowers with unique situations who don’t qualify for other funding options.

While traditional lenders base approval on a good credit score, low debt-to-income ratio, solid income, tax return documentation, and more, hard money lenders are looking for a deal that just makes sense. They’re looking for transparency and good organization from brokers.

What types of borrowers should use hard money loans?

Hard money lenders won’t all offer the same types of loans, because they will each have different areas of expertise and experience levels. Avantgarde Lending is able to offer California borrowers all types of loans in both the consumer and commercial marketplace.

Hard money loans often are known as short-term, last-resort loans, but Avantgarde Lending redefines the hard money loan simply as an option for borrowers who can’t find a source of institutional financing. This includes a wide variety of situations, not just real estate investors.

Consider a hard money loan for your customers if they:

  • Are self-employed or own a business
  • Need funding for new construction while they wait to sell their current home
  • Have a large amount of home equity
  • Need to consolidate debt and improve their credit score
  • Are real estate investors
  • Fix and flip homes
  • Want to purchase a primary residence or refinance
  • Want a second, third, or fourth mortgage

These types of customers may have a few things in common: They often have difficulty getting a traditional loan because they can’t easily provide all necessary documentation — or banks find their situations too complicated — and they need funds quickly. Hard money loans take days to get approved, as opposed to several weeks from traditional lenders.

Borrowers who have faced bankruptcy or divorce also may have trouble moving forward because banks will deny them a loan. Hard money lenders will provide loans for the following mortgage-related scenarios if the deal makes sense:

  • Paying a legal settlement or settling a divorce
  • Paying off bankruptcy
  • Getting out of a foreclosure
  • Dissolving a family trust

What do hard money lenders need from brokers?

Hard money lenders won’t have many questions for you about the borrower’s situation. They just want to know the subject property address and a short submission story that includes the borrower’s plan and exit strategy. It will also include the requested loan amount and project timeline.

Brokers should be comfortable discussing the ins and outs of your customer’s situation so that you can accurately communicate their needs to the hard money lender. On the other end, brokers need to fully understand the hard money lender’s needs so that you can gather the appropriate information from your customer.

This way, you’ll be giving all parties the best chance at success. Strong organization is essential to keeping track of all communication and requested items.

What property types can borrowers get with a hard money loan?

Avantgarde Lending offers funding for all property types, owner occupied or non-owner occupied consumer or business purpose loans. Most hard money lenders in California don’t lend for owner-occupied loans due to extra rules and regulations, but Marquee does.

Avantgarde Lending offers the following types of loans to California borrowers:

  • Single-family or multi-family
  • Commercial
  • Industrial
  • Construction
  • Land

Avantgarde Lending also offers purchase money, rate-and-term refinance, and cash-out refinance options. Loan amounts range from $50,000 to $20 million, with a loan-to-value ratio up to 70%, deal-specific.

Hard money loan benefits for mortgage brokers

The greatest benefits for mortgage brokers comes from satisfied customers. The speed and flexibility of hard money loans makes these deals an ideal choice for many borrowers who just aren’t able to get loans through traditional means.

Avantgarde Lending is proud to offer options to borrowers in unique situations who otherwise would not qualify for a loan. The average turnaround time on our business-purpose loans is seven days, and 10 days for a consumer loan.

Our team does all underwriting, processing, and servicing in-house. Our decisions are backed by years of industry experience that allow us to look at your customer’s assets and bank statements to determine what goes in, what goes out, and what’s left over. It’s that simple.

How do you find the right hard money lender?

Finding the right hard money lender might seem challenging, but it’s all about who you can build a successful relationship with. Learn about the lender, ask questions, and discover their background, successes, and portfolio, but also put your best foot forward and show the lender that you are the right partner for them.

A strong broker-lender relationship can lead to a future of valuable, mutually beneficial deals, and an even smoother and more streamlined process.

The Avantgarde Lending team is the ethical standard of the hard money loan industry. You can expect honesty, respect, and transparency with every deal and every customer.

Contact us today to have us review your loan request, or apply now and we will contact you soon.

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