Hard money loans have been typically thought of as a “last-resort loan,” but at Marquee Funding Group, we’re redefining the perception of private money loans.
Hard money loans are often the best option for borrowers who are unable to get conventional loans. Unique circumstances are due to employment history, credit score, or seeking a loan for a home flip.
Private money loans offer borrowers a simpler way to get the funding they need. This is without the exhaustive list of documentation that traditional lenders require.
Unlike conventional loans that take weeks to approve, hard money loans only take days to approve. They can provide funds much more quickly to people in complex or time-sensitive housing situations.
As a borrower, you’ll still need to provide hard money loan documents. However, private lenders will be more accommodating and simpler to work with than traditional banks.
How the Documentation is Different for a Hard Money Loan
When trying to get a conventional loan, borrowers need to provide years of income proof, debt history, job history, and credit reports.
These requirements are often too restrictive to people in unique situations, such as having poor credit, being self-employed, or trying to quickly purchase a house to fix and flip.
However, private money or “hard money” loans work differently.
Because hard money loans are funded by private investors, they allow greater flexibility for people with subpar credit scores or unsteady income.
While a bank might outright refuse to lend money to people with a credit score of 500, a hard money lender will be more willing to work with the borrower to make a deal if it makes sense.
Hard money loans are asset-based loans, meaning the agreement is secured by the purchased home as collateral. Because of this, acquiring a hard money loan is much easier than a conventional loan. Hard money lenders use common sense underwriting to make deals work without the red tape you get with a big bank.
When to Use a Hard Money Loan
Hard money loans cater to more people in unique financial circumstances and working independently. Unlike a traditional lender, the funding for hard money loans is provided by private investors.
These scenarios range from real estate investors looking for a short-term loan to purchase a fixer-upper, to new doctors who just graduated school with a high amount of debt looking to purchase their first home.
Self-employed borrowers also have a difficult time going the conventional mortgage route and are often turned down by banks. However, hard money lenders work with self-employed borrowers to look at their recent income and desired property to work out a deal.
Hard money loans aren’t exclusive to purchasing property or real estate, they can be used in times of financial need, such as settling a divorce or settling estates.
At Marquee Funding Group, we offer the following loan types:
- Loan amounts from $50,000 to $20 million
- Commercial, industrial, construction, and land loans
- Fix-and-flip or fix-and-occupy loans
- Single-family, multi-family, and condominium loans
What Types of Documents are Required for a Hard Money Loan?
Securing a hard money loan is much simpler and quicker than a conventional loan, and requires less paperwork and documentation.
Because conventional mortgage lenders are backed by the government, they have to meet strict requirements and require extensive documentation before they can approve a borrower’s loan.
Private money lenders still want an idea of your finances, but might be satisfied with just a W2 or credit history, which appeals to self-employed people.
Depending on which hard money lender you choose, you may find the hard money loan documents requirements are flexible.
Commonly required documents to secure a hard money loan include the following.
The first step toward securing a hard money loan is filling out the loan application form on the lender’s website. At Marquee Funding Group, we encourage potential borrowers to submit their loan scenario for consideration.
The purchase contract is a legally binding contract listing out the agreed-upon terms between the buyer and seller. This document is to be signed by both parties.
Proof of Insurance
You’ll need to show proof of homeowners insurance and other forms of insurance to protect your property from vandalism, fire, smoke, or weather damage before securing your funds.
Hard money loans are asset-based loans, meaning they depend on collateral to secure the deal. The loan agreement will list out details about specific interest rates and repayment terms.
Two Forms of Identification
Proof of identification, such as driver’s license, passports, or social security cards are often used to prevent fraud.
Proof of funds or income
While you don’t need to provide the extensive list that conventional mortgages ask for, you’ll still need to provide proof of funds to show that you can pay the down payment and pay off the short-term loan. This can include bank statements and W2s.
Hard money lenders often use a loan-to-value (LTV) ratio to determine the amount of money a borrower needs to put into a down payment. At Marquee Fund Group, our LTV is up to 70%, depending on the deal.
Preliminary Title Report
The preliminary report is required to show the clear ownership of the property and ensure there aren’t any outstanding loans or liens on the property.
This report will show information such as the lot size, property boundaries, and established easements or encroachments. They may also show certain building restrictions regarding the property type.
Secure Your Hard Money Loan with Marquee
Marquee Funding Group is an experienced team of savvy real estate investors. We work with borrowers who are in unique or complex financial situations to get them the funding they need quickly and easily.
Are you a real estate investor looking to fix and flip your next house? Or a self-employed worker who’s having difficulty getting a conventional mortgage? We want to help you.
Submit your loan scenario to us today, and we’ll let you know if it’s a good match.
Every scenario will be evaluated based on its merit, and if the deal makes sense, we’ll do it fast and simple — funding in days, not weeks or months.
Looking to get started immediately? Give us a call at (818) 222-5222.