The real estate market has always been a competitive space — investors must be ready to bid on properties as soon as they come available or miss out on the deal to a more prepared investor.
However, since more real estate investors often don’t have the cash in hand to purchase these properties, they turn to hard money lenders to arrange a flexible and timely loan deal.
For investors who have a history of bankruptcies or defaults, getting a traditional mortgage is nearly impossible. However, investors can often be given another opportunity thanks to hard money loans.
Unlike traditional loans, hard money loans use the property asset as collateral, which frees up hard money loan investors to make deals deemed “too risky” by traditional lenders.
If you’re a home buyer or real estate investor looking to purchase or refinance your next property, then continue reading to learn how a consumer and business-purpose loan may help you.
What is a hard money lender?
Hard money lending, also known as private lending, is a type of loan from a private or non-traditional lender to help borrowers purchase or refinance property.
Instead of working with a bank, which often has strict underwriting rules and requirements, borrowers can secure a loan by working with a hard money lending group.
Because the hard money lending group is funded by private investors, there is more flexibility in the eligibility requirements, as they aren’t bound by government red tape.
While banks traditionally use the borrower’s credit history to determine eligibility, private money lenders are more willing to forego bad credit or a history of bankruptcies.
At Marquee Funding Group, we have no minimum credit score requirement, because we are more willing to work with a borrower if the deal and property are right.
What’s your loan scenario?
While we do examine the borrower’s credit during their loan application, it is only a small factor that determines their eligibility, unlike traditional mortgages that place more importance on credit score.
In the past, many people viewed hard money loans as the last resort for people unable to get traditional loans, but that view has changed drastically in the last few years.
Generally, in order to secure a hard money loan, hard money loan investors will insist on having short-term repayment terms, much shorter than the traditional mortgage.
However, with Marquee Funding Group, we offer both long-term (15 to 30 years) and short-term hard money loans to both consumers and non-investors, which sets us apart from other private lenders.
What kind of property do hard money lenders lend on?
Traditionally, hard money loans were seen as inaccessible for the average person who was looking to purchase an owner-occupied home.
Hard money loans were more commonly used as business purpose loans for experienced real-estate investors or fix and flippers looking for short-term loans so they could purchase a property, renovate it, and pay off their loan within a year.
Because of the Dodd-Frank Act of 2010, financial institutions have gotten away from lending money for consumer-purpose loans.
However, Marquee Funding Group is one of the few private money lenders making owner-occupied and business purpose loans more accessible. We offer both owner-occupied and non-owner-occupied property loans.
These loans can be used to help individuals purchase or refinance their primary homes, vacation homes, or even Airbnb rental properties.
With a hard money loan from Marquee, borrowers can purchase the following types of properties:
- Owner-occupied residential properties or business purpose
- Commercial and industrial loans
- Single-family residential property and multi-unit properties
- Non-owner-occupied consumer or business purpose
- Investment property
- Construction group up, fix-and-flip, or fix-and-occupy loans
- Land loans
- Purchase money, rate and term refinance, and cash-out refinance
Is it a good idea to use hard money for real estate financing?
One of the most common uses of private money loans are fix-and-flip projects.
Traditional banks are wary of lending money for purchasing vacated structures. However, private money lenders are more willing to work out a deal, because they know these properties will have much larger profit margins once they’re renovated.
Often the greatest benefit of getting a hard money loan is the timing — hard money loans have a much quicker approval process. In no time, investors can secure the funds they need to bid on a time-sensitive real estate investment.
Having access to quick cash can make all the difference for investors looking to snag promising properties right away when they come on the market, and get an edge on other investors.
Traditional mortgages require much more information and paperwork, investors and fix-and-flippers wouldn’t be able to get their money in time to bid or compete to buy a house in time.
Another benefit of working with a hard money lender is building a professional working relationship — private lenders are more willing to work with established fix-and-flippers and investors with a proven history of paying off their loans.
Over time, once trust has been established between the borrower and lender, negotiating loan terms, such as interest rates and repayment plans becomes more seamless. When another property becomes available, it will become easier for the borrower and lender to work out a deal.
Hard money loans for first-time homebuyers
For some first-time homebuyers, getting a hard money loan might be their only money lending option because of unique life circumstances, such as not having an established work history, being self-employed, or having had bankruptcies in the past.
For instance, recent med-school and law school graduates often start their careers making a high income but still are unable to get a traditional mortgage because their employment history is limited.
People with irregular incomes, such as freelancers and self-employed people, also face difficulties getting first-time mortgages because they are seen as “too risky” for traditional financing.
For all of these examples, first-time homebuyers would benefit from the ease and flexibility of getting an owner-occupied hard money loan to purchase or refinance their home.
Hard money loans for first-time investors
Hard money loans make it easy for investors just starting out in the real estate industry to purchase or finance properties to be used as rental properties or commercial real estate.
Unlike banks, which have prohibitively strict requirements for credit and income, private money lenders can underwrite an application process and close in as little as 7 days.
At Marquee Funding Group, we have a variety of loan products that other hard money lenders and traditional lenders simply can’t compete with.
We also have no limit to the number of loans we can issue to a single borrower, which makes acquiring multiple rental properties a possibility for ambitious investors.
Finding the best hard money lenders
Marquee Funding Group is the premier private lender in the industry and offers a wide variety of loan products that traditional lenders, and other private lenders, simply can’t compete with.
Our funding group is one of the few private money lenders offering consumer-purpose and owner-occupied loans.
These loans can be used to help individuals purchase or refinance their primary homes, vacation homes, or multi-unit properties.