What is a hard money mortgage loan?
Hard money loans, also known as private money loans, are funded by private lenders or investor groups rather than banks. They allow borrowers to get a loan much quicker than the traditional route, because private lenders can evaluate situations on a case-by-case basis. They use common sense to determine whether they’ll provide you with a loan, rather than strict documentation requirements.
This freedom and flexibility gives opportunities to borrowers who may not qualify for a conventional loan, or those who need a loan quickly. Typically, repayment periods for hard money loans are one to five years, so they often are used for short-term projects such as property flipping.
The short-term nature lends itself to those who want to get in their home first, then refinance to a conventional loan later. However,Avantgarde Lending is one of the only hard money lenders in California that also offers long-term consumer loans ranging from 10 to 30 years, with fully amortized payment options.
Why get a hard money loan first?
If you’re going to have to refinance later, why not just get a conventional loan first? Well, conventional loans can be difficult to qualify for, and many people in various unique situations aren’t able to easily get one.
Traditional lenders will need to see pay stubs, tax returns, bank statements, and credit reports. So who “doesn’t qualify” for conventional loans, then? If you have trouble producing any of those documents, you will have trouble getting approved for a loan.
These documents prove to lenders that you can and will make your payments, so if you’re struggling with your credit score or can’t produce pay stubs because you’re self-employed, for example, you likely will not get approved.
With a hard money loan, you can do the following:
- Purchase a primary residence
- Refinance
- Consolidate debt and clean up credit
- Build a new house or remodel your home
- Acquire a second, third, or fourth mortgage
- Pay a legal settlement or settle a divorce
- Dissolve a family trust
- Pay off bankruptcy
- Get out of a foreclosure
If you do qualify for a conventional loan, it still can take several weeks for approval. With hard money loans, you can close in as fast as seven days.
For private lenders such asAvantgarde Lending, it’s about more than the deal at hand.Avantgarde Lending puts high priority on building long-term relationships with its borrowers and brokers. This mutual trust results in a lifetime of reliable real estate transactions that benefit both parties.
How to get a hard money mortgage loan
If this is your first time hearing about hard money loans, you may not know how to go about finding the right lender, or what is required.Avantgarde Lending provides hard money loans to California residents. Our goal is to be as clear and efficient as possible, which sets us apart from other lenders.
Marquee Funding Group doesn’t have many questions for borrowers: We simply want to know the property address and a short submission story. Since we evaluate each unique situation on a case-by-base basis, requested documentation will vary. But rather than needing strict requirements, we are able to listen and respond with a common-sense approach, focused on the merits of the deal.
