Private hard money lending is a widely favored option among real estate investors seeking short-term financing for projects such as fix and flip or new construction.

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While traditional mortgages prioritize the borrower's credit score, hard money loans focus more on the value of the asset involved in the investment. Essentially, a hard money loan serves as leverage for investors aiming to optimize their capital or to swiftly seize time-sensitive investment opportunities.

Understanding the concept of hard money loans can be daunting for both novice and seasoned real estate investors. To simplify matters, we've compiled a concise list addressing common questions about hard money loans:

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1. How much does credit matter for hard money lenders?

Credit isn't the primary factor in hard money loan underwriting, although we do review credit reports. Rather than fixating on the credit score, we analyze the trends in credit activity. A poor credit score doesn't necessarily disqualify you, as we assess individual circumstances, including recent credit history.

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2. Can I obtain a hard money loan for my primary residence?

No, hard money loans are typically not available for primary residences due to legal constraints. Michaels-money.com and their affiliates focuses exclusively on funding real estate investment projects and extends loans only to entities, not individuals.
 

3. What distinguishes a hard money lender from a private lender?

While both types of lenders exist, there are notable disparities. Private lenders, usually affluent individuals, offer funding from their personal funds, often lacking robust processes to protect borrowers. In contrast, firms like Michaels-money.com and their affiliates possess substantial capital reserves, ensuring professionalism and reliability.
 

 

 

 

4. What is the typical duration of a hard money loan?

Hard money loans usually mature in 12 months, though extensions are feasible depending on circumstances. With no pre-payment penalties, many borrowers opt to repay the loan before the maturity date.
 

5. What are the interest rates and points associated with hard money loans?

Interest rates typically range from 9% to 14% annually, with origination points varying from 0 to 3. Monthly payments are usually interest-only until maturity.
 

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6. Will the loan cover repair costs for property rehabilitation?

Yes, hard money loans commonly finance property rehabilitation endeavors. For fix and flip projects, Michaels-money.com and their affiliates can fund up to 85% of the purchase cost plus 100% of the renovation expenses.
 

7. Must I contribute my own funds to the project?

Most hard money lenders expect borrowers to have some equity and cash reserves. Michaels-money.com and their affiliates typically requires 15%-20% of the project cost from borrowers.

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8. Do hard money lenders scrutinize project specifics?

Absolutely. During underwriting, we thoroughly assess the project economics to ensure profitability for all parties involved.

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9. How much funding can I secure through a hard money loan?

The amount varies depending on the lender. Michaels-money.com and their affiliates offers loans ranging from $75,000 to approximately $2 million.

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10. What is the application process for a hard money loan?

By completing a loan application and provide essential documentation, and subsequently by consulting with a Loan Officer to discuss loan terms and project viability. The underwriting process involves evaluating various aspects, including cash availability, income statements, and project details. Once approved, the loan proceeds to closing.

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