Residential Hard Money Loans

Residential Hard Money Loans

If you're interested in purchasing a foreclosed property or a home that needs substantial repairs, or if you're in the process of foreclosure and are trying to refinance your home, chances are that a traditional mortgage broker or mortgage lender won't be willing to work with you. In these cases, a residential hard money loan, also known as a "hard luck loan," may be your only alternative.

Unlike "soft" loans that are easy to finance with flexible terms, "hard" loans have a restrictive application process and stringent terms, and with good reason: these loans are financed by private individuals or small local companies.

It comes as no surprise that this type of loan carries a much heftier price tag than their traditional counterparts. Typical fees and restrictions associated with a residential hard money loan include:

  • High APR. While traditional borrowers can receive fixed rate mortgages in the 5% APR range, hard money borrowers pay significantly higher rates, typically between 12-20%.

  • Points requirement. With a traditional mortgage, points are an optional method used to "buy down" the interest rate. In terms of money, one point is equal to 1% of the money financed. With a hard money residential loan, points are a requirement. Expect to pay 2-10 points a or 2-10% of the amount financed a in order to receive your loan.

  • 70% ARV (after repaired value) maximum. Hard money residential lenders will loan a maximum of 70% of the home's after repaired value. In other words, if you purchase a home for $25,000 that needs another $25,000 of repairs but will have a fair market value of $65,000 after repairs are made, the maximum funding you'll be able to receive is $45,500.

  • Stringent application. In order to protect their investment, hard money lenders subject borrowers to a stringent application process. If you think you'll be applying for a hard money residential loan, be prepared to provide W2's, tax returns, pay stubs, as well as statements from investment accounts and banks.
A hard money loan is a restrictive loan that carries a significant expense. However, if you don't qualify for any other type of loan, you may find the terms and fees to be a worthwhile alternative. As with any type of loan, do your research before signing and be certain that terms meet the needs of your personal scenario.

Hard Money Lenders

Refinance Calculator

Refinance Mortgage Rates

Home Refinancing

Questions to Ask When Refinancing

How Does Refinancing Work




Don't worry -- your e-mail address is totally secure.
I promise to use it only to send you How Does Refinancing Work Updates and Information..

To Homepage from Residential Hard Money Loans

Copyright © 2011 - - All Rights Reserved