Hard Money Frequently Asked Questions
What is a Hard Money loan?
A hard money loan is simply a short-term loan secured by real estate and funded by a private investor rather than a financial institution. The terms are generally 1 – 3 years, but they can be extended. Monthly payments are usually interest only with a balloon payment at the end of the term, although by then, the borrower is often able to refinance with a conventional loan.
Hard money lenders are primarily concerned with the property’s value rather than the borrower’s credit. Borrowers with less than stellar credit, even foreclosures or bankruptcy, can still obtain a hard money loan if there is enough equity in the property that is being used as collateral.
What states do you lend in?
We provide Hard Money loans in the state of California since 1988, and will continue to do so for many years. We also lend in Hawaii, and are branching out to other States. Please call or email to see if we can provide our fast and alternative Private Money loans in your state for purchases or refinances.
What loans do you offer in other States, such as Hawaii?
We offer fast, flexible Private Money loans for real estate purchases and refinances that are non-owner occupied. The purpose of the loan must be business purpose.
What islands of Hawaii can you lend in?
All of them really, including Hawaii County; Honolulu, Kauai and Maui.
Are you a direct lender?
Yes, we are a direct lender in that we do not broker out; We have our own large list of experienced private investors who we match up borrowers with.
Do you have to be licensed to give loans?
Yes, per State regulations an individual has to be licensed to be a Lender. There are a couple difference licenses but, we are licensed with the California Department of Real Estate as well as licensed through the Nationwide Multistate Licensing System. Annually we also have an 8-hour continuing education we must do, required by the State. Our Broker is additionally licensed as a Broker with the California DRE and our licensed Loan Originators all regularly attend the quarterly California Mortgage Association Conferences, to keep up on any & all private money regulation changes, advancement of programs available, etc.
Can another individual broker or refer to you?
Yes. Anyone licensed through the DRE can get paid a commission through their licensed Broker, for brokering a loan to us. Anyone not licensed through the DRE can get paid a referral fee for business purpose loans only.
Do you require any upfront fees before qualifying for a Hard Money loan?
Absolutely not! There are no application fees or lender fees required upfront for a Hard Money loan.
What are the rates for a hard money loan?
Hard money rates in general are higher than traditional bank or conventional lender rates. Depending on loan to value and location rates can be lower, and we have funded many such loans with lower rates.
How long does it take to close a loan?
We can fund fast! Our quickest funding was done in just 2 days – start to finish! Each loan is a different scenario but the average funding is 2 weeks.
Is a bad credit score an issue?
Your credit score is not a primary factor with hard money. With Hard Money, Private Investors are foremost interested in the real estate value and equity in the loan. We will pull your credit to ascertain the risk for the Investor but that’s about it. We have funded loans for individuals with little or even with no credit.
Is having a foreclosure or short sale on my record going to be an issue?
No, a foreclosure or short sale on your record will not affect your ability to qualify for a hard money loan with us.
What is the cost for a hard money loan?
Hard money fees vary Company to Company. We have a set Doc and Processing fees which are nominal. Then depending on loan size and scenario, we charge some points against the loan size which is how we get paid for our work. Again, these can vary Company by Company and are affected by the size of the loan. When calling or emailing us, feel free to give us your scenario and we will let you know the cost of your loan.
Is Hard Money considered predatory type lending and are you a loan shark?
No! We’ve helped so many home buyers buy their first home, rescued hundreds of real estate agents who had buyers unable to get a loan elsewhere, and we only work with qualified & professional Investors. Hard Money loans are heavily regulated and require strict adherence to State and Federal Regulations. We are a family owned hard money business operating since 1988, honesty and integrity is our top priority.
Are Private Investors / Hard Money Lenders just interested in foreclosing to get property?
No! This is a common misconception. Private Investors and Hard Money Lenders are simply trying to provide an alternative financing service. They of course hope to receive a good return on their investment and they protect themselves by investing against equity in your property to secure that return.
Sun Pacific Mortgage & Real Estate works directly with your situation to ensure you are qualified for such a loan in the first place. We pride ourselves on setting up borrowers with good loans they can afford.
Do I need to provide all my information regarding assets, income, etc.?
Hard money qualifications are considerably less stringent than banks or other traditional lenders so much less documentation is required.
With the main qualification being: a sizable down payment on a purchase or good equity in existing property; all else requested is secondary. The higher the loan to value (less equity in the property) the more items will be needed to show to the Private Investor that you are able to take on this loan and it will be more of a help than a burden.
When you get preapproved for a loan from us, you will receive a concise list of items needed for us to complete a full loan package and get your loan sold. It’s relatively simple!
How can I get prequalified for a Hard Money loan with Sun Pacific Mortgage & Real Estate?
Call (707) 523-2099 to receive a free consultation with no obligation to you. Our friendly staff will be happy to assist in answering any questions you may have.
Do only desperate/last resort individuals apply for Hard Money loans?
No! Hard Money is very beneficial when the circumstances call for it.
It is a fast and secure loan option to help close a purchase or refinance; it provides a very strong offer when purchasing; it can be used as a temporary or bridge loan; provides financing for those with difficult to prove income or poor credit; financing properties that need fixing, such as flips; it is great for refinancing if one can’t get a loan elsewhere to pay off another loan that has come due, or to pull out extra cash for property upgrades, to pay for kids’ colleges, etc.
Can you provide Owner Occupied financing?
Yes we can! While the regulations to do so have become more strict over the years, we still work with many borrowers who need owner occupied financing. We pride ourselves on adhering to lending regulations, to protect the borrower and investor alike.
What Property Types Qualify?
A borrower can get a hard money loan on almost any property type: single family, multiple units, land, and some commercial.
Many lenders have stopped financing owner-occupied homes because of the extra rules and regulations, but Sun Pacific Mortgage has made this one of our niche programs. We have thoroughly studied the intricacies of the regulations and we keep abreast of all the latest rules, regulations and their revisions.
What Interest Rates and Loan-To-Value Can I Expect?
Due to the higher risk involved with a hard money loan, interest rates are higher than current conventional loans, ranging from 8%-14% depending on a variety of reasons. They don’t even compare to the 21-24% credit card rates.
The amount a hard money lender is willing to lend is determined primarily by the loan to value (LTV). This percentage is determined by the loan amount divided by the value of the property. Our Investors at Sun Pacific Mortgage have financed up to 70% of the property purchase price or current value.
What Are the Standard Borrower Requirements?
The major concern for hard money lenders is the amount of equity in the property that is being used as collateral. They are less concerned with the borrower’s credit score, property condition or hoops that the larger financial institutions make you jump through on proving income. Foreclosures or short sales can be overlooked if the equity is there on the property. Our Investors will finance properties requiring fixing/upgrading; Finance despite difficult to prove income; Finance despite bankruptcy once it is discharged and various other problems that conventional and traditional banks and lenders cannot offer.
Don’t hesitate to CALL NOW (707) 523-2099 for a free proposal, have any questions answered, or to start your loan process.
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We provide ONLY California Real Estate financing. Minimum loan amount starts at $150,000.