what is Short Term Hard Money Loans

Short Term Hard Money Loans For Real Estate Investors

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Short Term Hard Money Loans For Real Estate Investors Was PUBLISHED On July 20th, 2019

There are many benefits in getting a short term hard money loans than traditional commercial loans for real estate investors.

  • Hard Money Loans are becoming more and more popular among real estate investors
  • This is because of its many benefits
  • When most people think of hard money loans, they think that hard money loans are for first-time investors with no experience
  • Or real estate investors who have bad credit
  • This is not the case

In this article, we will discuss and cover qualifying for Short Term Hard Money Loans For Real Estate Investors.

Benefits Of Short Term Hard Money Loans For Real Estate Investorswhat are Benefits Of Short Term Hard Money Loans For Real Estate Investors

Here is the reason why real estate investors prefer short term hard money loans versus traditional commercial loans:

Hard money loans are often called no-doc investment property loans because lenders require very little documents:

  • Fast closings
  • Most hard money loans can close in 2 weeks
  • Traditional commercial lenders take at least 60 or more days to close on commercial property loans
  • Hard money lenders underwrite the property and not the borrower so the borrower’s credit and income profile is not important
  • Investors can qualify with bad credit and no tax returns required
  • Skin in the game: Lenders want borrowers to have skin in the game and have down payment of at least 20% or more

Denied For Traditional Commercial Loan?

Borrowers who get turned down by commercial loans by banks or other lenders after months, they can qualify for alternative financing:

  • Short term hard money loans are a great alternative lending source
  • Investors can do a quick closing and save their earnest money
  • One great benefit of short term hard money lenders is that closings can happen in two weeks or less and a third party appraisal can be used
  • Gustan Cho Associates is associated with dozens of commercial and private money lenders
  • Gustan Cho Associates Mortgage Group are experts in catering to commercial borrowers who are non-bankable

Most non-bankable borrowers do not realize the lending options they have. Non-Bankable borrowers can now qualify for short term hard money loans.

Short Term Hard Money Loans For Real Estate Investors Mortgage Guidelineswhat are Short Term Hard Money Loans For Real Estate Investors Mortgage Guidelines

Here are borrowers who can qualify:

  • No FICO Requirements
  • No Tax Returns Required
  • No Waiting Period After Bankruptcy and/or Foreclosure
  • Minimum loan amount of $100,000: Exceptions allowed for loan sizes under $100,000
  • Cross-Collateralization Allowed from real estate investors with multiple properties
  • Small Balance Commercial Private Loans Available

Differences Between Short Term Hard Money Lenders Versus Traditional Commercial Lenders

Below are the pros and cons of short term private money lenders and traditional commercial lenders:

  • Mortgage Rates And Terms:
  • Hard money lenders have higher mortgage rates than commercial banks and traditional commercial lenders
  • Short Term Private Money Lenders do not have pre-payment penalties versus commercial lenders
  • Short term hard money lenders close loans in 2 weeks or less
  • Traditional commercial lenders may take more than 90 days to close on a commercial loan, no matter the size of the loan
  • Streamlined paperwork:
  • Very little paperwork required with private money loans and borrower credit
  • Income does not matter so that is why closing is fast and quick
  • Traditional lenders require resume of borrowers, personal and corporate tax returns, environmental reports, appraisals, due diligence analysis, and other time-consuming paperwork completed by borrowers
  • Bankable borrowers often choose to go with short term hard money loans due to fast closings and rehab the property and then go for an end loan
  • Short term hard money loans if ideal for property flippers
  • We offer no doc fix and flip loans with acquisition and rehab financing

Short Term Versus Long Term Real Estate Investmentswhat are Short Term Hard Money Loans For Real Estate Investors

The 2008 Real Estate and Credit Collapse devastated many real estate investors.

  • Many lost most or all of their properties including their personal homes
  • Most commercial loan programs went obsolete
  • Many commercial lenders required tax returns, high credit scores, and substantial down payments before they would issue a letter of intent to lend
  • Sub-prime and Non-Traditional lending is now back at both residential and commercial levels
  • Short Term Hard Money Loans is one of the most popular commercial lending programs and we get dozens of inquiries per day

The key to short term hard money loans is that investors need to put 20% or more in down payment.

Risk Versus Rewards And Skin In The Game

The less strength the borrower is, the more down payment is required. Investors with less than perfect credit and self-employed borrowers who have little to no income declaration can qualify for short term hard money loans. If you have any questions on short term hard money financing or any other types of commercial lending, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates are experts in government, conventional, and Non-QM Mortgages.

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