Posted by Are you facing the challenge of securing a loan for your real estate business expansion, hindered by a less-than-ideal credit score? If traditional bank loans have proven elusive and your real estate deal demands urgent funding, frustration and anxiety may set in. Fear not, as there are alternative lending solutions available. Consider delving into the realm of hard money loans through reputable hard money lenders in San Diego.
Unlocking Opportunities with Hard Money Lenders:
Hard money lenders can step in where traditional banks might hesitate or decline. If you’ve encountered obstacles securing a mortgage, especially for unconventional transactions, hard money loans provide a viable alternative. Issues such as credit challenges, self-employment, unique income situations, or property condition can be roadblocks with banks but not with hard money lenders. These loans operate on a more pragmatic and less paperwork-intensive underwriting approach, allowing for quicker funding. Let’s delve into key aspects associated with hard money loans:
Loan to Value Ratios:
The loan to value ratio (LTV) stands out as a crucial factor in hard money loans. Given the higher risk associated with these loans, protective equity for the end investor is essential, with the property serving as collateral. LTV ratios typically range from 65-75%, varying based on property type. For rehab and construction projects, additional ratios like loan to after repair value (ARV) and loan to cost value come into play, offering a comprehensive view of the financing structure.
Interest Rates:
Interest rates on hard money loans can vary widely, ranging from high single digits to the mid to high double teens. The variability is influenced by factors such as the lender, credit score, property type, LTV ratios, and more. Additionally, the length of the term and the loan’s position (first or second) impact interest rates. Engaging with a professional hard money lender in San Diego County is crucial to tailor the rates to your unique scenario.
Loan Term:
Hard money loans typically feature shorter terms compared to conventional loans, ranging from 6 months to five years. However, true 30-year fixed hard money loans are also available. The term length is negotiable, offering flexibility to meet the specific needs of your real estate project.
Repayment Structure:
Most hard money loans follow an interest-only repayment structure, with borrowers making monthly interest payments throughout the loan term. The full balance becomes due at the end of the term. While this is a common structure, some hard money loans offer fully amortized payment schedules, ensuring the loan is paid off in full by the term’s conclusion.
Conclusion:
Hard money loans serve as a valuable financing tool for real estate investors facing hurdles with traditional bank financing. While interest rates and terms may be more expensive than traditional loans, the flexibility in underwriting, approval speed, and accessibility can offset these costs. If you’re seeking a financial solution for your real estate endeavors in San Diego County, the experts at All California Lending can guide you through the process. Contact their team today for personalized assistance and explore the possibilities of hard money loans.