hard money loan uses the value of a property as collateral for the loan, instead of the borrowers credit score and financial history. Lenders focus on the after-repair-value (ARV) of a property to determine the value of the loan.
Since they are not based on credit history or debt-to-income ratio, these loans typically process faster than bank or credit loans. The loan is proportional to the ARV of the property, and the loan-to-value (LTV) ratio. With Taylor Made Lending, LLC., the LTV is at maximum 70%. In other words, we offer 70%. In other words, we offer 70% of the value of the asset, in addition to the interest rates. The property used as collateral may be on that borrower already owns, or one that they plan to invest in.
These loans typically span a 2-3 year repayment plan, with the opportunity to renew. They are meant to be short-term. In case a borrower is unable to repay the loan, the lender has the right to acquire the property registered as collateral.
Should I Consider a Hard Money Loan?
Hard Money Loans are best for borrowers who have been denied by traditional lenders and banks. When the bank says no, we say yes! Since the loans are based on property value, we save a lot of hassle on researching a borrower’s financial standing and credentials, allowing us to close loans quickly. This process takes about a week, unlike conventional loans which can take up to a month to process.
Hard Money Loans are best for:
- Turnaround Investments
- Land and Construction Investments
- Borrowers with Poor Credit
- Deals that Require Immediate Action
These loans are commonly used by real-estate investors who intend on developing or renovating a property, then selling it for profit. Remember, these loans are short-term loans! Investments should plan to build and flip quickly.
Things To Remember
Hard Money Lenders take greater risk of losing the loan, so interest rates are higher than conventional bank loans. In addition, the collateral is inspected and the value of the asset is what will determine the loan amount. If the loan cannot be paid, the collateral will be collected. The interest rates at Taylor Made Lending ranges from 8.99% – 12%. Our highest LTV ratio is 70%. The interest rates and LTV vary according to the interested property!