Situations & Hard Money Loan Solutions
There are several loan situations where a hard money loan is a great way to meet your goals. Each of the 5 common situations below can help you to gain a better understanding of how a private loan can help you when a traditional loan can not.
Borrowers interested in purchasing commercial, industrial, or residential real estate may find that credit ratings, legal obstacles or conditions related to the property itself (such as liens, an unfinished building, damages, etc.) may prevent institutional lenders from fulfilling a borrower’s needs. Hard money lenders tend to consider these things but give more weight to other factors. For this reason hard money loans are a great alternative financing source for real estate purchases. Private money lenders must adhere to state guidelines but are free to create their own guide lines unique to their hard money loan approvals. At Emory Funding, we have our set of guidelines that help us decide whether a private loan is a Win-Win situation for all involved.
Hard money lenders consider the entire prospectus of the investment unlike institutions that will decline a loan for a single credential. Hard money lenders will finance a foreign national where most banks will not consider. Hard money can be used to finance a property that is severely damaged or partial constructed. Many private investors will loan make a loan on real estate based on just a few factors. Yes credit is on that list but even having a low credit score in the 500’s is not grounds enough for disqualifying your hard money loan.
Hard money loans may be used as a temporary solution to obtain refinancing for commercial, investment or non-owner occupied residential property. Emory Funding often completes hard money loans for refinance in a situation where immediate funding isn’t readily available. Taking advantage of the equity in your collateral can help free up funds by offering liquid assets so that you can continue to meet your goal.
One of the most requested types of hard money loans is for the purpose of improving commercial or residential properties. The money borrowed is often used to improve the property, which may then be leased, or re-sold for a profit. Private money is a great resource in this scenario because of the quick turnaround time and flexible lending criteria. More importantly, we are able to fund in a fraction of the time that a normal lending institution would take. When it comes to rehab projects, the quicker the turn-around, the more profitable the project.
For borrowers who own a property free and clear a bridge loan is a low cost way to acquire a new property. A hard money loan encumbers the property already owned and the property to be purchased. At closing the borrower pays a low or no cost at all. When the property is sold it pays off the loan and effectively “bridges” the borrower from one property to another.
Private real estate loans finance REO and short sale acquisitions. These are short term loans for the purchase of bank owned or pre-foreclosure properties. In these situations, we will pre-qualify the borrower and property, provide the new borrower with a proof of funding commitment, and close on the property as quickly as possible. We can consummate a loan in half of the time traditional financing takes and with more flexible underwriting criteria that significantly aids the buyer in winning the bid.