Hard Money Lender Miami
Hard Money Loan Program
- Lending Area:
United States, emphasis in Florida - Loan Size:
$50,000 to $3,000,000+ - Loan to Value
(LTV): Up to 75% LTV - Closings:
Typically 7-10 business days - Amortization:
Interest only or amortized
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CALL US TODAY AT 561-609-6699
What is Hard Money Loan?
A hard money loan may be referred to as a loan that is given by a lender to a borrower depending primarily on the underlying or collateralized asset’s worth. In hard money loans, lenders often focus on the income and credit of the borrower whereas hard money lenders or asset-based lenders concentrate on the value of asset being utilized. Usually, the terms of conventional loans are long-term, lasting for around terms of 15-20 year. However, hard money loans are utilized as a short-term option, with its terms lasting for no more than 1-3 years. They are utilized to stabilize a commercial office, retail, industrial, single family, or multi-family residential home.
Why pick a hard money (or asset-based) loan over a conventional loan provided by a bank with comparatively lower rates?
There are a number of reasons why a borrower would prefer a hard money loan or private financing over traditional financing, despite the latter being comparatively more affordable.
Quick funding
When funding just a single family residential loan, banks take a minimum of 45 days. Additionally, they take 2-3 months for financing a commercial loan, and more than 4 months to fund a development loan. In contrast, hard money loan is usually financed within 1-2 weeks.
Property entails work
Since the underwriting guidelines of traditional banks are quite conservative, majority will not lend on properties requiring repair. Nevertheless, a private lender will be happy to loan on a property that either doesn’t have cash flow or necessitates physical developments so long as the borrower has enough equity or ‘skin in the game.’ For instance, banks almost never finance a loan secured by a property entailing repairs. So, the borrower will utilize a hard money lender to rehabilitate and purchase the property, subsequently using normal financing to settle the hard money loan. A different example would be a commercial property without having any tenants, that is, until the property is leased up, a bank wouldn’t loan. However, an exclusive lender can provide temporary financing to the borrower to buy the property and lease it. Once the property attains stabilization for a specific period of time, a commercial lender with normal lending will refinance the hard money loan.
Not entirely based on income or credit
Conventional banks depend significantly on a borrower’s ability to repay the debt, his previous income, and his credit score. So, good borrowers like attorneys, lawyers, and physicians having high incomes and lots of debt usually have their traditional lending turned down by the conventional banks. So, the significance of private lenders in Miami is immense, who perceive the underlying asset’s value in comparison with the loan amount versus the credit history of borrower. At A to Z Capital Lending, our capital decision is predominantly based on LTV (or loan to value). Usually, we look for up to 75% LTV in our loans. In simple words, it means that we often lend 75% out of the appraised property value to the borrower.
In Miami, what are the interest rates involved in hard money loans?
The rate by the lender is calculated by taking into consideration a number of factors, for instance, income and credit score of the borrower, loan to value ratio, amount of cash equity in the property or ‘skin in the game’ of the borrower, and location and condition of the property. At A to Z Capital Lending, the interest rates we offer are lowest in the market.
What are the fees relating to asset-based lending?
The financing origination fee that hard money lenders usually charge are 3-5% of the loan amount. Besides these, fees for miscellaneous processes are also charged, for instance, loan processing fee, assessment fee from an unbiased appraiser, application fee, and file preparation fee charged by a lawyer. At A to Z Capital Lending, our origination fee is quite low. We offer straightforward conditions without any hidden junk fees.
Can loan proceeds be used to pay the loan fees?
Yes, as long as there’s a sizeable equity cushion in the real estate. In majority of the instances, every other fee apart from the application fee is paid in the actual loan earnings.
Does hard money loans consist of a pre-payment penalty?
Usually, hard money lenders in Miami, Florida implement a minimum interest requirement of 3-6 months. For example, with a prepayment fee of 6 months, if the borrower repays the loan within 3 months, the interest of additional 3 months would be due. This condition is established so that lender acquires a little yield for the hassle, time, and apportionment of its funds to a particular borrower. If the hard money loan in Miami is repaid by the borrower after six months, no prepayment penalty would be issued. At A to Z Capital Lending in Miami, no prepayment penalties are made on hard money loans.
How quickly can hard money loan close in Miami?
A to Z Capital Lending is a direct hard money private lender at Miami, having the ability to close loans within just a matter of few days when a complete loan package is given including title commitment, appraisal or BPO, and credit report. The usual deal takes approximately 7-14 days to fund as an independent appraisal and title report need to be properly run on.
When is an appraisal required as compared to a broker price opinion?
For hard money loans, A to Z Capital Lending accepts a broker price opinion and another lender’s appraisal. A new appraisal will never be required, except only when renovation is involved.
What will the hard money lender require when finishing a fix, a rehabilitation project, or a finishing flip?
Besides the equity cushion of 35-40%, the lender will like the extent of work to be described with a cost analysis worksheet and timeline. This is used as a good tip in releasing capital for the purpose of rehabilitation. When performing a rehab, nothing goes as planned. Therefore, the lender will want to determine the experience of borrowers in managing or performing real estate repairs. After the completion of every draw, the lender require an inspection to be made, releasing funds in draws for such listed repairs. The lender may also entail a credit report and income statement to show that the borrower is capable for loan repayment. Still, hard money lenders don’t focus on the credit score but on the asset value of the security.