Sacramento Hard Money Lenders

The concept of a hard money loan has been around since the dawn of civilization. Hard money loans are a type of asset-based financing where a hard money lender extends capital to a borrower that is secured by real property. Hard money loans are typically used for commercial and residential real estate investments.

If a property listing requires only cash offers, they will request a copy of your bank statement to verify you can close. In situations where traditional lenders are unwilling or unable to lend money, and financial institutions are not lending money, hard money loans can be a good option. When you work with a hard money lender, your commercial or residential real estate deal can be closed quickly with no or little credit issues involved.

If you are considering hard money lenders, you should consider the added risks that come with them, such as higher interest rates and lower loan-to-value ratios. As long as the hard money lender has a good track record of providing loans at reasonable prices with a set of acceptable parameters in terms of risk, most of them should be able to provide the loans to clients.

However, when deciding on whether to choose to use a hard money loan or not, one must take into consideration all factors despite the protections that exist. 

Hard money loans are typically used for all sorts of real estate transactions, for borrowers who need a lot of money to close on a deal quickly. They are commonly used to flip houses, rehab properties, or even for new construction.
These loans are an alternative when more traditional loans are not available or take too long to close. With hard money financing, you can have the cash much more quickly – in as few as 7-14 days!

The interest rates are usually higher than those on traditional loans, but it’s worth it if you need access to cash right away. These loans also come with short repayment periods – 3 months-5 or years at most.

They require a higher down payment (generally 20% – 40%), and the hard money lender provides the rest of the funding. You will also have to pay closing costs, so the loan-to-value ratio is typically around 65%.
Whenever you need a hard money loan to refinance your property, the first step is to calculate the value of the property against what you owe. It is possible to borrow up to 65% of the appraised value of the property. The property must be located in California. A low credit score won’t prevent you from getting hard money financing because we require very little paperwork.

Yes. An interest-only loan is a loan in which the interest on the loan is calculated on only the original principal amount for the time it was borrowed. The repayment of principal and interest on an interest-only loan is deferred until a future date or until a payment schedule has been agreed upon. This type of loan strategy allows both parties to avoid losing money, as well as saving taxes by lowering or deferring income and capital gains.

Financing with hard money is very straightforward. During the period when you use the money of an investor, you will pay interest on it every month. As soon as you are no longer in need of the money, simply repay what you borrowed. In the case of a $200,000 loan, the entire amount will be deposited into your bank account. You might not need the whole $200,000 for your construction project at the moment, but there is no such thing as a hard money line of credit. As a result, all the money must be taken at the loan’s close.

A hard money loan can be refinanced. Refinances usually require a loan-to-value not to exceed 65%. If you are refinancing a hard money loan and decide to sell your property, the new buyer will require you to deed over the loan in some form. As part of the loan documents, they will require you to pay off any liens on your property. In some cases no prepayment exist, in other cases you might be offered a high interest rate for a 3 month prepayment penalty.

No. A hard money loan is designed to bridge the gap between the equity in your property and the cost of your fixer-upper or land. You do not use a hard money loan to provide you with your down payment for a new property. With a loan from a hard money lender, you will usually be asked to bring a down payment to the deal. The lending industry refers to this as “skin in the game,” which means both the borrower and lender lose money if the project fails.

A hard money loan can be used to help purchase homes that are undergoing renovations, but the loan will only be for the amount of money that you need to finish those renovations.It is not entirely secure for a hard money lender to lend you money if they finance 100% of the purchase and improvement costs for your fix-and-flip project.

In most cases a full appraisal by a certified appraiser will be required. If the property has very low LTV the appraisal may be replaced by a simple walk through inspection.

It can take longer to get approval when you wait for traditional appraisal services. The appraisal process can take approximately two weeks. A hard money lender may be able to get your loan funded in as little as three business days if you have the right collateral and meet the threshold.

Hard money loans are secured loans used to purchase hard assets, usually real estate. Using investment as collateral, hard money lenders don’t rely on a borrower’s creditworthiness but instead on their investment’s merits. They are meant for those who need to finance a project quickly and without the stress of waiting on time-consuming loan processes.
Various structuring options are available. The transaction can be a refinance, purchase, or even a second trust deed. A loan can have a term of up to five years.

 
In some cases, they can be fully amortized or interest only. The real property serves as collateral. Occasionally, additional properties can be utilized if one doesn’t have enough equity. Cross collateralization is the term used to describe this process. Generally, hard money loans are shorter in duration and higher in interest than traditional bank financing.

In most cases, a hard money loan is paid back by selling the property, refinancing into a conventional loan, or paying back the entire amount by using savings or selling another property to repay the loan.

Many times it can be very beneficial to consider this option in many cases. Often, it is the only option that is available to you. If you can purchase a property with significant potential in terms of appreciating gains in the future, it would be better to use hard money instead of walking away from the property. There would be no point in losing out on a good deal simply because you are not able to obtain a conventional loan. Hard money can also be an option if it is a refinance and it is the only option that is available to you. It is quite common for proceeds caused by the sale of a business to be used to take advantage of business opportunities that would otherwise be unattainable. In any case, the decision should be made on the basis of the merits of each opportunity on an individual basis.