Hard money is a collateral based lending platform.  Although credit, ability to repay, financials and the borrower’s overall package do play a part in the lending decision, the largest consideration is given to the loan to value of the property.  Loan to value is a ratio, and for hard money it usually needs to be a maximum of 65-70%.  If you have a property worth $1 million, you should not expect to be able to encumber that property with more than $650-700k total debt.

Hard money lending offers the flexibility needed in today’s market.  Creative structuring of transactions is common.  With hard money, you are able to encumber multiple properties, provide alternative forms of income and overcome even major credit issues. 

One big advantage of using a hard money lender is the personal relationship involved.  You are not dealing with a large institution, trying to fit into a pre-determined qualification box.  You have the opportunity to be underwritten on a personal level.  Because there is no minimum credit score required, hard money lenders will look at all credit situations, giving you the opportunity to explain past issues.  A good hard money loan is one where the investor and borrower are both on board with a solid game plan that leads to the take out of the hard money loan, usually through a refinance or sale.

Working with a hard money specialist is ideal when trying to obtain a private money loan.  Not only is it important to have the correct structure and complete package, but it is just as important to be sure the professional you choose has the resources to fund your transaction.  With the recent shakeup in the mortgage industry, many brokers who used to do only conventional financing have started to look into hard money.  While you can learn how to structure deals, it takes time to build the relationships needed to fund hard money loans.

I am a hard money specialist, with access to direct money in house and a large database of private and hard money investors.  Feel free to contact me today for more information on hard money programs, or to discuss your loan scenario.