FUNDAMENTALS
HARD MONEY
Hard Money Loans Demystified
WHY THE INDUSTRY IS CONFUSING THIS TYPE OF LOAN WITH ANOTHER
by Michael Mikhail
HARDMONEYLOANS A true hard money loan (is an asset-based loan, which means the financing is based on the Loan to Value (LTV) of the asset. Unlike the fix and flip loan, it does not go through full underwriting and there is no minimum FICO requirement for the borrower, as it doesn’t have many guidelines and criteria. This type of loan doesn’t have as many restrictions as one might think
egardless of the type of inves - tor you are and your loan
considering that it’s just money, so no more having to worry about bankrupt - cies, foreclosures, collections, etc. Due to the lack of guidelines and underwriting, a true hard money loan is generally capped at 65 percent LTV or less. For example, let’s say you have a home worth $1M, if you want $500,000 against it (50 percent LTV), you’re able to receive the money within one or two weeks (from day of application), commonly as a first
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scenario, there is an array of loan programs designed to meet all your mortgage needs. Hard money and fix and flip loans are among the most popular programs that real estate investors utilize. Although they are two different programs, many in and out of the industry believe them to be the same loan. This misconception is the furthest thing from the truth.
56 | think realty magazine :: march 2021
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