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What Are The Differences Between A Traditional Loan And A Hard Money Loan?



If you have ever applied for a mortgage with a bank, you know it can be a long and sometimes difficult loan process. It seems traditional lenders want an inordinate amount of information from you.

General loan requirements include your loan applications, minimum credit scores, bank statements, income verifications, borrower and property financials, etc., etc. etc.

Once you think you have satisfied all of the bank’s requests, they come up with a new one as well as additional conditions for approval!  Even if you meet all of the traditional lender’s strict lending requirements, the process can still feel exhausting.

In contrast, when you apply for a real estate loan with a hard money lender, the loan process is overall more streamlined and efficient.  Hard money loans require less paperwork and third party reports. This is a welcome change for those who don’t want to be burdened with a lengthy loan process or don’t have the credit scores or lengthy financial records to qualify for a traditional loan.  Such loans are ideal for borrowers who don’t qualify for a mortgage under traditional lender requirements or for those properties requiring some fixing as they don’t qualify for a bank loan.

General hard money borrowing requirements are considerably looser than conventional financing.  As the risk is greater for the private investor, rates are generally higher and the borrower is required to come in with 20-30% equity or down payment if a purchase.

Here at Sun Pacific Mortgage we have 2 main loan qualifications:

#1. Decent equity for a refinance or at least 25% down payment on a purchase and  

#2. An ability to repay the loan.  

If you are thinking of refinancing or purchasing property and are having difficulty at a bank or other Lending institution, then give us a call at 707-523-2099!

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“The Guy In The White Hat – Your Hard Money Lender”. Broker and Co-Owner of Sun Pacific Mortgage & Real Estate, family owned and operated in Sonoma County California since 1988.