Hard Money: The Perfect Source for Bridge Capital

San Diego hard money, also known as private money, can be a perfect source for bridge loans. A bridge loan is a general term used to describe a short term loan. Typically bridge loans are less than 12 months but could extend as far as 24 months.

They are used in residential and commercial financing.

Often bride loans are used until permanent financing can be secured by the borrower. Because they are short term loans, they usually have points and fees that are greater than conventional bank loans.

In instances where a borrower may need a loan for a short period of time, they may seek private money sources to obtain a loan.

The following are some cases in which a person may use hard money for a bridge loan:

1. To close a purchase fast

2. To prevent a property from falling into foreclosure

3. Refinance a loan that is coming due or approaching a balloon period

4. Take advantage of an opportunity with a quick turnaround

5. Need to draw on equity through a cash-out loan before selling a property

6. Need a short term business loan and you have equity in your property

To be eligible for a hard money loan, you'll need to show the following:

1. Equity

2. Loan to Value (LTV) of less than 65 percent

3. Capacity to Repay

Oftentimes, a given property that is already pledged as collateral may not yield enough equity. In these cases, a private investor may be willing to "cross-collateralize" several different properties to make up the difference.

While these kinds of loans can be processed rather quickly and are typically written for 12 months or less, the lender must be sure to fully underwrite the property, the borrower, and the borrower's credit.

Typically, you'll need to provide the following documents to make a loan request.

1. 1003/Application (Lender must provide)

2. Credit Report (Obtained by lender)

3. 2-6 Months of Recent Bank Statements (Borrower must obtain)

4. Documentation of Income (Borrower must provide)

5. Contract for Purchase (If applicable)

6. Appraisal of Property (If applicable)

7. Pro Forma (If applicable)

8. Executive Summary (If applicable)

9. Cost Break Down (If applicable)

The usual time frame for getting a hard money loan in place is about 7 to 14 business days after the lender has all of the borrower's information in hand. It should now be apparent that private money loans close far more quickly than conventional loans. Because of this, private loans are a viable solution for those in need of a bridge loan.

The bottom line is that these loans close quickly and provide a good interim solution until a borrower is able to obtain permanent financing. As with most loans, there are few to no fees upfront for getting a California hard money loan. Fees are generally paid in full through escrow upon the closing of the transaction.

If the loan was obtained for a property refinance, fees can often be rolled into the loan. But, if the loan is for a new purchase, the borrower must be able to bring money to escrow before the loan closes.

Example

Refinance scenario: Desired loan amount of $100k, property value of $200k, fees of $10k = final loan amount of $110k with 55 percent Loan to Value (LTV)

Purchase example: $200k property value and purchase price, with a $60k down payment, $10k in fees, final loan amount of $140k, and borrower to pay escrow $70k

San Diego hard money can be used for various projects. This article shows the benefits of using hard money for bridge loans. Because hard money loans can be organized quicker than bank loans, they are often used in situation where temporary financing is needed.

To ensure that you make the best loan decision, evaluate your situation thoroughly and come up with several possible paths for achieving your goals.

For the most up to date information about California Hard Money, these are the only resources you will ever need Scottway Capital Hard Money and California Hard Money.