What Types of Projects Qualify for Hard Money Loans?
Generally, hard money lenders require their borrowers to form some sort of entity (usually an LLC), rather than borrowing as an individual consumer. So, it’s important that you make sure your purchase contract is assignable to an entity or the contract is originally in the name of an entity that you have previously formed. Additionally, almost all hard money lenders require the property to be non owner-occupied. This means that for the duration of the loan, the borrower cannot be living in the property covered by the loan. Next, you have to check with the hard money lender to see if they lend in the particular state that your property is located. Most hard money lenders do not lend nationwide and many only focus on one state.
The following are good examples of programs that a great hard money lender will engage in:
Fix and Flip
Cash-Out Refinance
New Construction
The fix and flip is a popular revenue-generating strategy that involves the purchase of land or property, the development or renovation of it’s current status, and it’s resale at a price higher than the sum of the total project costs. Cash out refinance involves refinancing an existing mortgage loan, where the new mortgage loan is for a larger amount than the current loan – so you (or the borrower) receive the difference between the two loans in cash. The term “new construction” is typically used to describe a house that is currently being built or has been completed but has never had any occupants.
Each potential project contains its own set of circumstances, so it is important to contact the hard money lenders in Maryland to understand if your particular project will qualify. But, when you contact the lender, be sure to have all of the relevant facts of your deal readily available.
How Quickly Can I Get a Hard Money Loan?
It is possible to score a hard money loan very quickly! This is one of the great benefits of choosing a hard money lender versus a traditional bank. The first step is to gather together all of your deal points and fill out an application. Within a 10-minute conversation with the lender, assuming you present the circumstances of your plan in a clear and organized fashion, they should be able to tell you whether or not it seems like a deal they are interested in funding. After submitting an initial application, and depending on the lender you are dealing with, your loan will go through an underwriting process in which the hard money lender will review the contract, the proposed scope of work, overall deal structure and value, and any other pertinent information you provide them with. The lender will want to involve an experienced appraiser to inspect and appraise your property as you proceed with the loan process, so as to avoid any misjudgments and to make your loan process more accurate and smooth.
Once the underwriter approves the loan, the hard money lender is able to push the loan into the closing process immediately, which will be held at a title company or attorney’s office. If you have all of your affairs in order, the typical hard money lender can get through the entire process and fund within two weeks, but some are capable of closing as quickly as 2-3 days.
Readmore Qualifying For A Hard Money Loan
