Hard Money Direct Loans - Real Estate Bridge Loans Louisiana
Updated: Aug 4, 2022
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What is a bridge loan vs hard money?
So, what's the difference between the two? Let's have a quick look at some differences between hard money loans and bridge loans. More often than not, a hard money loan is financed by a private lender. In a bridge loan, however, the money usually comes from banks and is not necessarily collateralized by hard assets.
Is it hard to get a bridge loan?
Sound finances: To be approved for a bridge loan typically requires strong credit and stable finances. Lenders may set minimum credit scores and debt-to-income ratios. Generally speaking, if your financial situation is shaky, it could be difficult to get a bridge loan.
What are the requirements for a hard money loan? The main requirement for getting a hard money loan is having the required down payment or equity in a particular property to use as collateral for the loan. The minimum amount usually ranges from 25% to 30% for residential properties, and 30% to 40% for commercial ones.
How much can you borrow on a bridge loan?
How much you can borrow with a bridging loan will depend on the value of your properties and your personal finances. The maximum loan, including any retained or rolled up interest is normally limited to 75% loan to value (this can be over multiple properties).
What credit score do you need for a bridge loan? Since the sale of the current property will automatically pay off the bridge loan, the lender can be reasonably certain they will recoup the loan amount. A credit score of 650 and above should be easily approved by private money bridge lender.
What is a bridge loan example?
Example of how a bridge loan is used You have $150,000 left on the mortgage. You take out a bridge loan for 80 percent of your current home's value, which is $200,000. This amount is used to pay off your current mortgage and give you an extra $50,000 for your new home's down payment.
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Why is it called a hard money loan?
Hard money loans are essentially a type of asset-based financing in which the borrower acquires funds that are secured by real property. It's called a “hard money” loan because it's harder to acquire and pay back than its soft money counterpart.
Hard money loans are a form of short-term financing, with the loan term lasting between 3 and 36 months, because investors don't intend to hold on to the property for a long time. Instead, they are interested in buying low and quickly flipping a sale for a profit.
What is the difference between a hard money loan and a conventional loan?
Hard money loans are a business product. They are not for ordinary home buyers who would be much better suited for conventional mortgages. Rather, hard money loans are intended to finance investment property that can be purchased, fixed if necessary, and returned to the market within a span of months.
Do Hard Money loans show up on credit?
Most hard money loans, such as fix and flip loans, will not show up on your credit report. However, you should keep in mind that this is not always the case, and you should discuss the specifics of your loan with your lender. Either way, the loan will typically appear on a background check or asset search.
How do you present a deal to a hard money lender?
Tell your lender about yourself. Private lenders want to know the person behind the numbers, so in addition to a loan application and financial information such as copies of your credit reports and tax returns, you'll also want to include a resume that showcases pertinent experience for your planned project .