The point of this post is to cover some basics. You may be wondering if there is a source of financing out there that is suitable for you when other avenues have lead to dead ends, or you’re running out of time to make the most of opportunities. We’re pleased to say that if you’re new to hard money loans, then the answer is yes!
Scan ahead if you’re wondering “how does a hard money loan work?” but first we will consider the essentials of hard money and what it can do for you.
To answer the question “What is a hard money lender?”, we should look at the loan itself.
A hard money loan is a kind of loan financing that is secured by real estate. You may have heard of it described as a rehab loan, a bridge loan, or a bridging loan. Private investors (or a fund of investors) who offer hard money loans are looking for an opportunity that provides a safe and high return. The borrow receives a sum of money, circumventing conventional lenders, like banks or credit unions.
Fast hard money loans are frequently used by property-buying investors. They are seeking funds with which to purchase properties to restore or renovate them before selling them for a profit. While these businesses and individuals could also obtain a more conventional form of financing, this takes time. One of the benefits of a hard money loan is its speed.
When asked: “What is a hard money lender?”, it’s useful to compare this type of financing with other lenders in California to illustrate just how fast hard money loans can benefit borrowers.
With the necessary documentation, Lantzman Lending, one of the leading lenders in California, can close a loan in as few as three days! That means that people in urgent need of fast hard money loans could apply on Monday morning and have the loan closed by close of business on Wednesday!
Compare this to seeking a loan through a bank, which is likely to take at least a month.
Hard money loans are also a useful resource when obtaining other types of loan is impossible. They can fill a need such as those caused by credit problems, foreclosure or bankruptcy.
Alternatively, someone might seek a hard money loan to stabilize or refinance with conventional financing.
So, what is a hard money lender? It’s simply an individual or a company that specializes in loans secured by real estate.
There are various types of these fast hard money loans available, so keep doing your research and get in touch with the professionals to find the loan package that’s right for you.
When seeking lenders in California, make sure to check out Lantzman Lending. As one of the best hard money lenders in California, we have a great reputation, we can provide flexible hard money loan terms, and we’ll work quickly and efficiently to give you the boost you need for your project or business.
How does a hard money loan work?
Know that you know what fast hard money loans are, it’s time to answer the question: ‘How does a hard money loan work?” Why are they so fast and how are they available without the same criteria as is required by banks or credit unions?
With fast hard money loans, the amount of the loan will be a percentage of the subject property. The property in question might be a property that is owned by the borrower, in which case it is used as collateral, or it could be the property that the borrow is attempting to acquire.
Because the loan is secured by an asset, the borrower’s credit is not the lender’s primary concern. It will still factor in the decision to approve a loan, but many borrowers find that hard money loans offer them funds when banks would close their doors to them as a result of insufficient credit ratings. If you’ve already been turned down for loans by banks, it’s worth considering a hard money lender, because the ways of determining suitability for a loan are different.
For a hard money loan, the value of the property is deemed to be its quick sale value. Borrowers can typically receive up to 65% of the property value as a loan, depending on the type of loan required.
Most hard money lenders specialize in particular kinds of loans, so search for the money lender that is right for you. Lantzman Lending, for example, specializes in loans for commercial and residential real-estate.
Applying for a hard money loan is still subject to checks, but due to the different requirements and money source, it’s much quicker to apply for a hard money loan than a conventional bank loan.
In most cases, the borrower will submit an application to receive a quote. With Lantzman Lending, you can apply by email or using their online form and receive a quote the same day. You’ll be asked for your contact details, of course, the subject property address and details (type and value), the loan amount requested and few other relevant details.
If the borrower wishes to go ahead, the lender will handle the paperwork. When all the necessary documents have been signed, the lender will wire the money.
The speed of a hard money loan means that borrowers needn’t miss out on opportunities. For example, in situations where there are many competing bids for a property, a hard money lender can provide the funds fast so the borrower can participate and acquire the property.
Hard money loan terms are usually around a year. The best hard money lenders can offer some flexibility. With Lantzman Lending, hard money loan terms can be shorter or longer than the year-long term offered as standard by other lenders in California. We can tailor the loan to the requirements of the borrower.
So, how does a hard money loan work? The answer is: efficiently, quickly, and customized to your exact needs.
There are different types of hard money loan available. Lantzman Lending specialize in the following:
Fix-N-Flip or Rehab Loans
With this kind of loan product, the borrower can receive as much as 85% of the purchase price of the subject property plus 100% of rehab construction costs, or they will receive between 65 and 70% of the after repair value.
If the borrower is looking to buy and sell their property quickly for a profit, it may require only cosmetic work and repairs, but may also need more extensive remodel work. The investor should consider how much of the work they are able or prepared to do themselves and work out the cost of performing these tasks, in addition to the cost of paying for contractors and materials. This will allow them to work out how much money is required as well as the after repair value of the property, which can then be incorporated into the loan.
The rehab portion of the loan would be held in fund control and released on draws, with interest paid only on the drawn amount of the loan.
Lantzman offers these loans with no repayment penalty and it’s possible to arrange an extension.
With a construction loan, Lantzman Lending can provide 100% of the construction amount, as long as this figure is no more than 65% of the finished value of the property. The loan is held in fund control and released on draws. As with Fix-N-Flip or Rehab Loans, the borrower only pays interest on the drawn amount of the loan.
For refinancing, the borrow can get a loan for as much as 65% of the current fair market value of the property. Fair market value is the estimated market value of a property and is based on what a willing and knowledgeable buyer would pay for the property without duress.
In this case, cash out needs to be used towards business purposes.
Again, the borrower of a commercial loan with Lantzman can receive up to 65% of the current fair market value of the property and cash out needs to be used towards business purposes..
Hard money loan terms
Investors who work with Lantzman Lending can borrow between $50,000 and $3,000,000+ over 6-24 months. These are some of the best hard money loan terms on the market. In addition to this, we will consider longer hard money loan terms on a case by case basis.
Our loan origination fees vary according to loan terms, so it’s best to get in touch for full details as they apply to your case. Every borrower is different and we treat every loan on an individual basis to provide a truly customized and customer-centric service.
How to find a hard money lender
Many individuals and firms require the services of a hard money lender. Fortunately, there are several options.
It’s a good idea to try word of mouth. See if anyone in your network has used lenders in California. Ask about their hard money loan terms and ask for recommendations.
If they reply: “But what is a hard money lender?” you might be better off looking online! One of the best ways to find your hard money lender is to do a search on the internet. Be sure to include your location in your search, however, as this will supply you with hard money lenders that operate in your vicinity and are familiar with your locale.
If you want the best hard money lenders in California, for example, make sure to narrow your search to that state to ensure that you make the most of the speed and local knowledge of your financing professionals.
When it comes to finding reputable hard money lenders, the key is to check out their experience and their reputation. A good hard money lender will be able to demonstrate their reputation via testimonials or reviews on their website. If you would like further reassurance, you should ask for references.
You’ll also have a good idea what to expect from your lender when you communicate with them, either by email, over the phone, or in their office. You should expect professionalism at all times and they should tell you upfront whether or not they can help you with your particular finance requirements, as these money lenders tend to specialize in chosen areas.
Since speed is often critical in this kind of arrangement, pay attention to how quickly the money lender replies to your messages. Also, be wary of anyone trying to pressurize you into taking a loan. Many borrowers are under enough pressure as it is, with time constraints or facing financial difficulties elsewhere, and this is the time for making sensible, calculated decisions based on facts. The best hard money lenders will be able to advise you on the best products for your needs.
Lantzman Lending is among the leading lenders in California, with a combined experience of more than 50 years, and provide financing to a variety of real estate investors. We achieve the best results by tailoring our loan programs to the needs of individual borrowers.
Our team of financing experts is professional, efficient, practical, providing you with reassurance, a transparent approach, and hard money fast when you need it.
Since we are a direct lender, we can accommodate most scenarios. Our focus is on the success of the borrower so that our loans work smoothly and the best outcomes for all concerned.
If you’re looking for the best hard money lender for your needs, you should know that our customers consistently say that we are reliable, efficient, and, of course, fast. Our hard money loan terms are competitive and our integrity is second to none.
Those who borrow with us often come back for repeat loans as they take on new projects and expand their portfolios. Fast hard money loans are perfect for investors who are looking to move quickly in the marketplace.
We pride ourselves on our approach, which is not only to provide you the best loan for your needs but to treat our relationship as a partnership. We care about your success. We’re looking for opportunities in which all parties benefit.
With a hard money lender behind you, financing obstacles disappear and you can get on with the business of focusing on your properties, completing sales, or construction or renovation work. We are big enough to provide you with the money you require quickly and we are flexible enough to accommodate your individual needs and to provide extensions where necessary.
The application process is simple. We examine clearly defined criteria to determine how we can help you. From this point on, we can handle the whole process.
To learn how Lantzman Lending can help you, get in touch today. Whether you’re ready to apply for a hard money loan or you want to find out just how does a hard money loan work in your particular circumstances, give us a call on 858-720-0229 or email us. You can also receive a customized quote by filling in our easy to use online order form.