Hard Money Loans (also known as Private Equity Loans)
A hard money loan is a specific type of asset based loan where a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers.
Our hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral (property). Typically, the biggest loan one can expect would be between 50% and 65% of the property value. For the purpose of determining the LTV, the value of the property is defined as "today's purchase price" or "appraised value" which ever is lower. This value may differ from a market value appraisal, which assumes an arms-length transaction in which neither buyer nor seller is acting under duress. If for example the property is worth $100,000, the lender would advance between $50,000 and $65,000 against it. This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.
A hard money loan is a type of real estate loan collateralized against the quick-sale value of the property for which the loan is made. Our lenders fund loans in the first lien position. Occasionally, we will subordinate to another first lien position loan, but on a case by case basis.
Cross Collateralizing a Hard Money Loan
In some cases, the low loan to values do not facilitate a loan sufficient to pay off the existing mortgage lender, or to meet the borrowers needs. As an alternative to a potential shortage of equity, we will allow a cross lien on another one of the borrowers properties, should that property have sufficient equity.
Hard Money Loan Rate
Hard money mortgage loans are generally more expensive that traditional sub-prime mortgages. Generally a hard money loan carries additional risk. Private investors are generally only willing to create hard money loans in return for a high interest rate, often between 8% and 12%.
Hard Money Points (fees)
Points on our hard money loans are traditionally between 2% and 5% on average.
We have private money available for both purchase and refinance on all types of Southern California properties.
Available on Non Owner Occupied Properties Only
- Rates from 8% to 12%
- Points from 2% to 5%
- 1st mortgages only
- Cash out available
- Investor flips allowed
- We lend against commercial, residential, multi-family
- Stated income
- Up to 65% LTV (purchase transactions)
- Up to 60% LTV (refinance transactions)
- Loan amounts as low as $75,000
- Monthly interest only payments
- 3 months to 20 year loan terms
- No prepayment penalty available
- Broker cooperation
Give us a call to discuss your particular loan scenario!!