Here is a very easy to follow checklist for how to get a Hard Money loan, given in a recent Trust Deed Capital Blog, for those who just can’t get approved for a regular home loan…be it poor credit, condition of property, self-employed with difficult-to-prove income, etc.
Hard Money loans can be quite helpful to anyone who has found that dream home but they can't qualify yet for conventional financing...but they can qualify within 6 months to a year. It can also be helpful to a "flipper" who wants to purchase a fixer-upper to resell after they remodel/renovate it. Also for an Owner who has equity in their house and they want to buy their new home before they sell their current home.
Hard Money has helped many,many individuals and Agents alike to rescue deals that were going to be cancelled due to current loan not going through. Review this checklist and you'll see for yourself how simple a Hard Money Loan can be!
Best, Forest – The Guy in the White Hat
Broker/Owner Sun Pacific Mortgage & Real Estate - Hard Money Lenders Serving all of CA since 1988!
BRE #0464899/NMLS #360993
Posted by Ken Meyer on Tue, May 26, 2015
There is a sense of urgency with hard money loans. For whatever reason, such as an interruption of funding or a quick take down of cheap property, a hard money loan usually needs to be acquired quickly. It is important to help a lender feel comfortable and to help a lendee receive funds as soon as possible. To do that, here is the ultimate checklist for you and your hard money lender.
The collateral being offered to secure the loan must be properly defined in terms of what the property is being classified as and what the value is. It is also important to know what the value is based on, whether it be an appraisal, a broker's opinion, or something else. Both a lendee and lender should know if there are any liens on the property that might prevent it from being purchased, and who actually has the title of the investment property. Is it the bank, or a private owner?
The location of the investment property can make or break a hard money loan deal. An investment property located in a less than ideal location can send a red flag to lenders who many not feel the investment is safe in the neighborhood. When seeking a loan, it is useful to have pictures of not only the property one wishes to buy, but the surrounding area as well.
Have a Solid Plan
So you want to buy an investment property. That's great, but what do you plan to do with it? Not only do you need to have a plan, but the lenders want to know what the funds are being used for exactly and they need to know more than how much the property costs. It is useful to plan what the property will be used for and, if you plan on renovations, how much they will cost. Get a quote from contractors and show it to lenders.
Perhaps the most important thing to plan, though, is how the loan is going to be repaid. Hard money loans are short-term loans, so what is the plan for repaying at end of term?
Though hard money loans are secured by the value of the property and not usually on credit, there are certain documents that a lender will need to see. These include proof of income, what other assets you or your business have, and what your credit is like. Other documents that may be needed, depending on whether you are a solo investor or company, include: purchase contract, recent bank statements, proof of closing funds available, operating agreement, and property financials. Every lender is different and will require different documentation.
The Loan Application
Don't forget the loan application and to make sure to follow the lender's submission guide to avoid being denied a loan. If your potential lender calls you, don't wait to call back, do so as soon as possible. Lenders want to feel their investment will be safe and secure. So, make them feel that way with this ultimate checklist and you will be on your way to a hard money loan.