Fast hard money loans

Fast hard money loans definition:

Fast hard money loan is a real estate equity loan being funded by private investor or a group of investors for business purpose. It is arranged by a lender or broker and requires only evidence of equity and evidence of business purpose. It is different than consumer hard money that is also funded by private investors but requires more income documentation and proof of ability to make payments. A lender is a person or a company who arrange loans and fund it directly. The lender may keep the loan and service it himself or sell it to private investors with or without servicing agreement.  A broker only arrange a loan between a borrower and a lender or between a borrower and a private investor. A broker does not fund the loan from is own money.

The reason that business related hard loans can be done so quickly  is that the lender relies only on the equity in the property and dose not need to investigate the borrowers credit nor does he need to verify the borrowers ability to make payments. (Note: Fast hard money loans are no longer possible for consumer purposes because Federal laws require full verification of the ability to make payment as a condition  to arranging such loans. Also Federal laws are now restricting the amount of fees and dictating the rate and terms of all consumer loans which slow down the process and cut down on the number of private investors who otherwise would have fund such loans. Consumer related hard money loans are still being done but it is no longer "fast" like it used to be before October 2009.)

 

Loan To Value on fast hard money and rehab loans

The loan to value for the fast hard money mortgage loans is between 50%-75% depending on the nature of property, its condition, its location and the general market condition at the time of loan being arranged. See table of ltv and hard money rates

Rehab loans of Fix N' Flip can be done very fast because they are consider business loans.  To calculate one uses the  present market value and also on future value called After Repair Value of ARV. Because of the inherited risk connected with any rehab construction project the hard lenders will normally reduce the ltv by 5%-10% and will also  insist that the borrower have "skin in the deal" .  Rehab loans requires the the borrower to demonstrate how he is going to pay for the work and his experience in similar projects.

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