Unlike banks, private lenders can give you a hard money loan easier, faster, and securely. It may become an excellent solution for situations like fix and flips, land loans, construction loans, or the case when an investor has to act quickly and has no time to wait. However, there are some requirements you need to know before getting a hard money loan:
1. Down payment/equity
One of the main requirements is having a down payment or equity of a particular property used as collateral. The minimum range for residential property is 25%-30% of the loan amount, and for commercial property, the range varies from 30% to 40%. So, obviously, the higher the down payment is, the bigger the chance to get a loan.
2. Overall financial strength
The second key point is the borrower has to have cash reserves to make monthly loan payments and holding costs. The minimum cash reserves depend on the loan amount the borrower wants to get. Subsequently, each case is unique.
3. Real Estate experience
If the borrower has little real estate experience, a lender may ask for detailed information on the project to make sure the loan will be repaid. Usually, the lenders want to see a construction budget, architectural plans, and contractor bid sheets. But if you are a real estate veteran, you won’t have any difficulties getting a hard money loan.
Getting a hard money loan is much easier than getting a loan from the bank. Usually, lenders don’t require a perfect credit significant income from borrowers. Also, self-employment is not considered unacceptable by lenders, while banks prefer professionals with a very steady income. And the most considerable advantage for borrowers is they spare less time to seek a financial solution but have more time to handle their business.
Here we collected the list of the most popular answers borrowers usually ask:
Does my credit score matter?
The answer is yes; it does matter. The minimum credit score with which we can provide a loan is 500 fico.
Does a hard money loan go on my credit?
Yes, it does. It appears on an Asset Search or Background Check
How long does a hard money loan last?
Typically the terms are from 6 months to 3 years
Is getting a hard money loan a legal procedure?
Yes, it is. P2P lending is a legal process regulated by RBI, and it ensures security for both parties – lenders and borrowers.
What documents do I need to get a hard money loan?
You will be required to provide a Note and a Deed of Trust, personal financial documents (tax returns and income docs), assurance the borrower has cash reserves to perform property renovations.
LBC Capital is a direct lender, so you don’t need to wait weeks or months until the loan is approved. In our case, it takes up to 24 hours to approve the loan and up to 7 business days to close it. Also, it’s not a big deal if you need a more considerable sum – we offer loan amounts from $100,000 to $15,000,000.
Call (818) 761-7234 to choose your loan program or to get personal assistance!