Hard money lenders will offer a range of requirements on how much they will lend (loan to value), what types of real estate they will lend on (commercial, residential, multi family, land) and minimum and maximum loan sizes.
Hard money lenders that lend on residential property must be licensed through their state regulatory agency and through the National Mortgage Licensing System.
Borrowers should verify the lenders license through the NMLS in order to prevent problems at closing, as many states require the lender's license number to be listed on the loan documents.
Not having the license number on the loan documents could prevent the loan from closing.
Hard money lenders structure loans based on a percentage of the quick sale value of the subject property.
This is called the loan to value or LTV ratio and typically hovers between 60 and 70% of the market value of the property. For the purpose of determining an LTV, the word "value" is defined as "today's purchase price."
This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a one to four month time-frame.
This value differs from a market value appraisal, which assumes an arm’s length transaction in which neither buyer nor seller is acting under duress.
Commercial hard money lender and bridge lender programs are similar to traditional hard money in terms of loan to value requirements and interest rates.
A commercial hard money or bridge lender will usually be a strong financial institution that has large deposit reserves and the ability to make a discretionary decision on a non-conforming loan.
These borrowers are usually not conforming to the standard Fannie Mae, Freddie Mac or other residential conforming credit guidelines.
Since it is a commercial property, they usually do not conform to a standard commercial loan guideline either.
The property and or borrowers may be in financial distress, or a commercial property may simply not be complete during construction, have its building permits in place, or simply be in good or marketable conditions for any number of reasons.
Hard money lenders that lend on residential property must be licensed through their state regulatory agency and through the National Mortgage Licensing System.
Borrowers should verify the lenders license through the NMLS in order to prevent problems at closing, as many states require the lender's license number to be listed on the loan documents.
Not having the license number on the loan documents could prevent the loan from closing.
Hard money lenders structure loans based on a percentage of the quick sale value of the subject property.
This is called the loan to value or LTV ratio and typically hovers between 60 and 70% of the market value of the property. For the purpose of determining an LTV, the word "value" is defined as "today's purchase price."
This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a one to four month time-frame.
This value differs from a market value appraisal, which assumes an arm’s length transaction in which neither buyer nor seller is acting under duress.
Commercial hard money lender and bridge lender programs are similar to traditional hard money in terms of loan to value requirements and interest rates.
A commercial hard money or bridge lender will usually be a strong financial institution that has large deposit reserves and the ability to make a discretionary decision on a non-conforming loan.
These borrowers are usually not conforming to the standard Fannie Mae, Freddie Mac or other residential conforming credit guidelines.
Since it is a commercial property, they usually do not conform to a standard commercial loan guideline either.
The property and or borrowers may be in financial distress, or a commercial property may simply not be complete during construction, have its building permits in place, or simply be in good or marketable conditions for any number of reasons.