Steps to Getting a Hard Money Loan

Obtaining a hard money loan from a reputable hard money lending firm isn’t as difficult as it may seem. Qualified and seasoned hard money lenders can quickly recognize whether or not an applicant’s real estate acquisition or refinancing scenario will fit within their hard money lending parameters.  Whether you are seeking financing for a commercial building (occupied or vacant), a multi-unit housing project, a single family home being used for business purposes, vacant land or agricultural land, a hard money lender could be the solution you need.

If you are in need of real estate financing but think that a traditional mortgage loan might not be the best fit for you, or if you have been turned down by mainstream traditional lenders in the past, a hard money loan might be the key to helping you finance your next real estate project.

How to Apply for a Hard Money Loan

Although applying for a hard money loan is relatively easy, there are steps you should take prior to contacting a hard money lender in order to present a complete picture of your loan request during your initial conversation. Hard money lenders receive dozens of applications per week, and although the hard money lending process is often much simpler and faster than obtaining a traditional mortgage loan (some hard money loans can be funded as quickly as 48 hours), it is important for applicants to present a full and complete picture of their loan request during the application process. Below are some ideas as to how you can do that.

Have Thorough Details Regarding the Collateral

Your lender will want specific details on the collateral that will secure your loan. Be prepared to answer questions such as:

  • Where is the real estate located?
  • What type of real estate is it?
  • What are the real estate specifics (square feet, site improvements, zoning, entitlements, etc.)?
  • What is your plan with the real estate?
  • What is the cost of the real estate?
  • What is the value of the real estate?  And how did you come to that value?
  • How much income does the real estate generate?

Be Prepared with Your Loan Request

Before you apply for a hard money loan, it’s important that you are able to answer the following questions regarding your financing needs:

  • What loan amount is requested?
  • What loan term is requested?
  • What is the specific use of loan funds?
  • When is the money needed?
  • Where is your equity for the loan closing coming from?  Or if you are seeking to refinance your property, how much did you purchase the property for and how much do you currently have in financing?
  • How will the loan be paid off?

Be Prepared to Share Your Personal Information

Although the collateral is the primary emphasis for a hard money lender, they will also want to understand your financial situation and your background.  The basics include your net worth, sources of income, and a resume or bio explaining your background.  A hard money lender will want to make sure that your qualifications meet those required for your real estate loan request.

Contact the Lender in Person if Possible

It’s best to submit an application for a hard money loan in person if possible.  If that’s not an option, or if you would prefer to quickly see if your project is viable, a phone call or Email is sufficient. Be wary of hard money lenders that only allow online applications and take deposits in order to consider your loan for financing.  Most legitimate lenders will do some initial underwriting on the project and provide you with a term sheet explaining financing costs and terms prior to requiring a deposit.  When you are able to visit the lender in person, it will give you a chance to meet them in person as assess their abilities as well as give them an opportunity to meet you in person.

Determining whether your loan request qualifies for financing from a reputable hard money lending firm such as INCA Capital is easy and quick. If you have a project you are acquiring, or need refinancing for a project you currently own, contact us today for a quick loan evaluation.