Hard money? Loan Modification? or Conventional?
Use the table below to determine what best for you
(Applies for residential properties only. For commercial and land )
Can you verify your income and savings?
|Do you must have cash out?|| Do you have
(Include lost of income bad credit etc.)
Do you have Equity or Down payment)
|Purchase||Yes||N/A||No||At least 5%||Conventional|
|No||N/A||N/A||At least 35%||Hard money|
|No||N/A||No||At least 5%||1. Find co- borrower whose income can be
verified and try for conventional loan
2. Find co- borrower who has at least 30% cash down payment and you can get get hard money loan
|Yes||Yes||No||At least 20%||Conventional|
|Yes||Yes||YES||At least 35%||Hard Money|
|No||Yes||Yes/No||At least 35%|
What Is A Hard Money Loan?
A hard money lending is a specific type of real estate asset-based loan financing through which 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. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.
Many 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 maximum loan to value ratio is 65–70%. That is, if the property is worth $100,000, the lender would advance $65,000–70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.