While Hard Money Loans can be somewhat unknown to the average consumer, they often are even less well understood. Hard Money Loans come in a variety of forms and typically offer a higher degree of flexibility and a larger number of options that conventional bank loans. Here’s a closer look at just some of areas in which Hard Money Loans can help.
Unlike banks and other lenders that are beholden to strict rules about what types of loans can be made with regards to certain properties, Hard Money Lenders often are freer to lend on a wide range of properties and to work with borrowers to accommodate unique circumstances. At Fidelity Funding, we pride ourselves on working with prospective borrowers to arrange loans on almost every property type, commercial or residential.
The flexibility of Hard Money Loans makes them particularly effective as bridge loans. Just like their name sounds, bridge loans are short-term loans that “bridge” the gap by providing much-needed short-term financing. For example, if a potential borrower is eager to close the purchase of a property but is having difficulty arranging complex, long-term financing with a bank or other conventional lender, a hard money bridge loan could provide the funds necessary to complete the purchase in the immediate term while the giving the borrower time to close the deal on longer-term financing.
The flexibility of Hard Money Loans also makes them uniquely well-suited as so-called “Fix & Flip” loans. While the stringent lending criteria of banks and other conventional lenders oftentimes can make it difficult for them to make loans on “fixer-uppers,” we understand the house-flipping business and are able to gauge for ourselves the potential in often-overlooked properties. The ability of Hard Money Lenders to make short-term loans on properties that do not meet the lending requirements of banks makes them particularly well-situated to act as fix & flip loans.
Because they have more flexibility in working with borrowers to make sometimes unconventional loans, Hard Money Lenders also can be a good source of emergency financing. Hard Money Lenders are able to bypass much of the regulatory red tape that bogs down conventional lenders, meaning that even if one is able to qualify for a conventional loan, the money often does not arrive soon enough. At Fidelity Funding, we pride ourselves on working with the speed and flexibility our borrowers need when meeting their emergency financing needs.
Hard Money Loans also can be taken out as second or third mortgages in situations where conventional lenders may not allow. This can be particularly important in situations where one possesses equity in a property but is in need of immediate short-term liquidity. Additionally, Hard Money Loans secured by second and third mortgages can be arranged for a wide variety of reasons, durations, and on both commercial and residential properties. Even if one has a first mortgage held by a conventional lender, a hard money loan might be a good choice for a second mortgage, should one ever need to convert hard-earned equity into liquidity.
The strict rules imposed on conventional lenders like banks means that they are unable to make loans on many unconventional properties that do not fall within narrow parameters. This potentially leaves many property owners with nowhere to turn when in need of financing, though they may be creditworthy and/or possessing equity in their property. Thankfully, Hard Money Lenders are not beholden to the same stringent lending requirements, allowing them to make loans on many properties on which conventional lenders cannot or will not lend.
Unlike many conventional lenders, Hard Money Lenders are free to look beyond a potential borrower’s credit score in considering their loan application. Significantly, Hard Money Lenders often will place greater weight on the value of the underlying property and the resulting loan-to-value ratio than to a borrowers’ supposed “creditworthiness” in making lending decisions. This can be of huge benefit to borrowers who, oftentimes through no fault of their own, may have encountered credit problems in their past–whether it be due to student loan debt, medical bills from a serious ailment, the failure of a previous business, or any number of other reasons–but still may own property with equity in it.
Hard Money Loans can be of benefit in a wide variety of situations that don’t necessarily comply with the strict, narrow requirements of convention lenders and conventional loans. Hard Money Lenders are able to look at each borrower’s unique circumstances in determining what kind of hard money loan would be best for his or her personal situation and, in many instances, are able to provide funding where conventional lenders cannot.
Hard Money Loans come in a variety of forms, with different rates and durations suited to the borrowers’ unique circumstances. In this way, Hard Money Lenders are more free to make loans that fit their borrowers’ needs, rather than borrowers having to contort themselves to suit the particular needs of a lending institution. We understand how hard and frustrating it can be trying to fit a square peg in a round hole, as often is required with conventional lenders, and so we pride ourselves on offering Hard Money Loans specifically fitted to our borrowers’ needs.
Hard Money Loans fill an important role in the financial system by providing borrowers with the flexibility and speed that conventional loans oftentimes cannot. Further, Hard Money Loans are available to many borrowers who may have encountered credit difficulties in the past. Because Hard Money Lenders look at factors beyond the credit score–factors like loan-to-value ratio–they are able to offer loans to many borrowers who would be denied by conventional lenders.
Fidelity Funding proudly offers a wide range of loan products capable of suiting the needs of virtually every borrower. Contact us today for more information about how Fidelity Funding can fund a hard money loan that works for you!
Phone: (877) 300-3007