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Latest Break Down on Hard Money Loans | Valor Lending Group

Are you looking for a short-term financing solution?

Are you interested in learning more about the hard money loan process?

Valor Lending Group is here to give you the latest break down on our Hard Money Loan programs. We have the right connections to get a hard money loan locked and loaded for you today.

CALL or EMAIL today to start your scenario!

What you will learn:

• What a Hard Money Loan is
• Why you would want to use a Hard Money Loan
  • Speed
    • Same as cash purchasing power
  • Temporary Financing Solutions
    • Value-add/Property Stabilization/Fix and Flip/Construction
    • Borrower financials currently less than perfect
• What does a Hard Money Loan look like
  • Types of Hard Money Loans
    • Fix and Flips, Commercials Value Adds and Construction Loans
    • 1-4 Unit Residential Purchase and Cash Out Hard Money Loans
    • Commercial Hard Money Loans
• Advantages and Disadvantages of Hard Money Loans
• Finding the best Hard Money Lender
• Fix and Flip Loans
• What a Fix and Flip loan is
• Fix and Flip Loan highlights
• What you will need for a quote
• Ground Up Construction Loan highlights
• 3 Bridge Loan Options
  • Owner-occupied
  • Investment Property | Non-owner occupied
  • Cross-collateral Loans
• Recap of Valor loan products

A) What is Hard Money?

Typically hard money lenders are private investors, investor groups, pools of funds, life insurance companies and even pension and retirement funds. Hard money loans are an alternative to traditional bank lending that allows flexibility and expediency. As a result, hard money lenders and hard money loans are not required to conform to the same guidelines as traditional financing, such as the standardized Fannie Mae and Freddie Mac underwriting guidelines for loans to be repackaged and sold on Wall Street.

A hard money loan is a loan that is secured by a “hard” asset – i.e., real property. Hard money lenders secure their loans with real property as collateral, they are most concerned with a borrower’s equity in the property (or down payment for a purchase). The maximum amount a hard money lender is willing to extend – or leverage – is based on a percentage of the property’s value. Hard money lenders are most concerned about the Loan-to-Value (“LTV”), which is the loan amount divided by the value of the property.

B) Why Use Hard Money?

Every well-equipped borrower’s toolbox should have a reputable hard money funding source. Even though banks are often able to offer lower rates, banks do not offer hard money loans, because their loan programs don’t allow for the same flexibility that hard money lenders can afford. In addition, traditional lenders have loan committees and a more involved underwriting process and it is not unusual for both of these to delay the loan process. Hard money loans bridge borrowers from one type of financing to another.

There are 2 main reasons to use hard money loans:

1. Speed
2. Temporary Financing Solutions

1) Speed: Same-as-Cash Purchasing Power One of the main reasons to use hard money loans is their speed. Hard money loans can be closed much quicker than traditional loans, offer in 1-2 weeks, sometimes quicker. Some of the best hard money lenders are able to make their underwriting decisions and issue a term sheet on the first phone call, and some are even able to fund loans in 24 hours! For those needing a quick close with minimal documentation, hard money loans are a great fit. 

2) Temporary Financing Needs Hard money loans are more simple and quicker than traditional loans. There are two main categories of temporary financing situations in which hard money loans make sense:

1. Property needs to be stabilized
2. Borrower’s financials need to be stabilized

(a) Value-Add / Property Stabilization / Fix-n-Flips / Construction

Hard money loans are particularly well-suited for situations in the financed property needs to undergo some kind of renovation. This can range from cosmetic upgrades to full gut rehabs and rebuilds. The issue for borrowers in these situations is that traditional lenders base their funding decisions on the current value of a property.

Hard money lenders, on the other hand, are willing to base their funding decisions (at least in part) on the future value after renovated value (“ARV”) of the property. Hard money lenders are willing to lend on the riskier, future expected revenue of a property, because they mitigate their risk with a lower LTV and charge higher rates.

Fix-n-flips are a classic situation in which a hard money loan makes financial sense. In these situations, the loan is based on the after-renovated value. Once the property is finished being rehabbed, and realizes its full income-producing capacity (“stabilized”), the hard money loan can be paid off in 1 of 2 ways: sell the property, or refinance with a traditional lender now that the as-is value supports the loan.

(b) Borrower Financials Currently Less Than Perfect

Hard money lenders are far less concerned with credit issues such as foreclosures, bankruptcies, late mortgage payments, etc., and have less stringent underwriting guidelines.

There are times when a borrower is simply unable to provide documental traditional lenders require, whether due to the nature of their business, or the fact that tax returns may not be an accurate reflection of the current financial situation.

Hard money lenders are willing to look past such credit issues where there is enough equity in the property, or a borrower has enough access to capital to make payments on the debt.

Hard money lenders typically do not want tax returns or employment/income info. If there is significant equity remaining in the property after the hard money loan is accounted for, some hard money lenders will refinance a property with nothing more than a Driver’s License, Preliminary Title Report, and a visual inspection of the property (a “drive-by appraisal”).

1) Types of Hard Money Loans

(a) Fix-n-Flips, Commercial Value Adds, and Construction Loans

Fix and flips, value adds, and other distressed properties, as well as construction loans, can be difficult to finance using traditional lenders such as banks because these types of properties are inherently risky. This is a prime example of where hard money loans can be used.

Construction projects are by nature short-term, and usually, these types of hard money loans are for terms of 18-36 months. Hard money construction loans are used to cover the cost of labor and materials for the development project, and sometimes also the land acquisition.

(b) 1-4 Unit Residential Purchase and Cash Out Hard Money Loans

Generally hard money loans are used to purchase 1-4 united residential properties quickly because their speed often provides same-as-cash purchasing power.

In addition, many investors utilize the equity in their property by “cashing out,” or placing a lien on property in exchange for cash proceeds.

(c) Commercial Hard Money Loans

Also, hard money loans are used for multi-family apartments, commercial, industrial, retail, raw law, and many other property types.

Advantages and Disadvantages of Hard Money Loans:

1) Pros of Hard Money Loans

• Speed – Streamlined Process – Faster than traditional loans
• Flexible temporary financing solutions
• Viable option to finance rehab and value add projects
• Less focused on credit history
• Minimal documentation and asset verification
• Interest-Only Payments available

2) Cons of Hard Money Loans

• Larger down payment may be required
• Typically more expensive than traditional loans
• Balloon payment requires good take out strategy (this is not a con for savvy investors!)

Finding the Best Hard Money Lenders

Many hard money lenders do not have a retail channel, meaning they will only funds loans procured through a broker. The best brokers spend many hours scouring thousands of loan programs to find the best rate and terms for their clients. Mortgages are largely fungible, and borrowers tend to be rate sensitive, so it is in the broker’s best interest to find the lowest rate and most favorable terms available in order to close the deal. Also, watch out for excessive upfront fees. Reputable brokers do not charge their fees unless and until the loan is funded (although in some instances a lender will require an application fee/deposit). Except for situations in which you are paying for a credit check, appraisal, or placing the funds into a separate performance escrow with a trusted escrow company, high upfront fees and costs can be a potential red flag.

Latest Break Down on Hard Money Loans | Valor Lending Group

Fix and Flip Loans

Are you interested in rehabbing a property and flipping it for a profit?

Valor Lending Group can help you will all of your fix and flip loan needs!

Information on constructions loans options HERE

CALL or EMAIL ME TODAY!

What Are Fix and Flip Loans? 

Fix and Flip loans are hard money loans used to purchase and rehab a property, and then resell it at a higher value. The Fix and Flip lending market has been quite frothy the past few months.  If you are an experienced flipper, you may notice that your old lender of choice has increased rates, decreased LTVs, and in some cases quit funding altogether. For first timers, the market has become substantially hard to break into.

No need to worry however! We have seen a resurgence in fix and flip lending in the past week and are pleased to announce we are funding in 42 states again, and multiple lenders are doing up to 90/100 (90% of purchase and 100% of rehab) with rates in the high 6’s.

These loans do not require tax returns, income/employment, or debt-to-income ratio calculations.

Rehab | Fix and Flip | Loan Highlights:

• Up to 90/100 (Purchase/Rehab)
• 12 to 24 month terms
• Loan amounts up to $10MM
• No Prepayment Penalty
• Interest starting in the high 6’s

Needs for Quote:

1. Property Address:
2. Purchase Price (for Purchase):
3. “As is” Value:
4. After Repair Value
5. Current Balance (for Refinance):
6. Rehab Budget & Detailed Cost Breakdown
7. Project Experience as a Sponsor
8. Approx Credit Score:
9. Vesting in and Entity or Individual name:

Ground Up Construction Highlights:

• Up to 90% LTC
• Max Loan Up to $20 Million
• Flexible Guidelines
• 12 to 24 month Interest Only Interest Rates

Other Programs Available:

• Commercial Loans
• Hard Money Loans
• Save your Deal | We Save Deals

Latest Break Down on Hard Money Loans | Valor Lending Group

Bridge Loan Options | 3 Options | Typically without an appraisal*

Are you looking to purchase your dream home but at a stand still because your current home has not sold yet?

A bridge loan is a short-term loan, also referred to as a swing loan, cross loan, or flip loan. It is a short-term loan that allows borrowers to help you to lock down the purchase of your new home while you are in the process of selling your current home. There will be a few factors that will determine the terms of your bridge loan, for the most part most bridge loans will pay off the balance of your current home and will provide you with a precise down payment for your new home.

Valor Lending Group is waiting for your CALL or EMAIL today!

Valor Bridge Owner Occupied:

Do you need to pull cash out of your primary residence for a business purpose?

• Property being used as the borrower primary residence
• terms of up to 11 months
• Max LTV of 75% on 1st TD | Max CLTV 65% on 2nd TD
• No Prepayment Penalty
• Interest Only starting in the 7’s

*Owner occupied for California Properties ONLY

Valor Investment Property | Non Owner Occupied:

Property being used as the borrowers investment property

• Terms 1 to 5 year
• Max LTV of 80%
• No Prepayment Penalty
• Interest Only starting in the 7’s

Valor Cross- Collateral Loan:

Do you have a portfolio with properties that have available equity? 

• Leverage for 100% financing when crossing other real estate owned at 65% CLT for 100% Financing
• Terms of 1-2 years
• Max CLTV of 65%
• No Prepayment Penalty
• Interest Only starting in the 7’s

**no Appraisal Subject to lender discretion on a case by case basis

Recap of our Loan Products:

1. Hard Money Loans (20% down / minimal documentation) Typically Fund in 7-10 days.
2. Stated Income Loans (Great for business owners and self employed ) No tax returns!
3. 100% financing is available (we can cross collateralize other properties if there is enough equity)
4. Valor VA Home Loan 100% financing up to $1.5MM
5. Rental Property Loan – No tax returns or DTI calculation! Based on subject property cash flow – No DSCR Coverage needed!
6. Flipper & Rehab Loans (Flip a property with one of our many options)
7. 2nd Position Loans up to $5mm
8. Raw Land & Lot Loans
9. Ground up Construction for spec homes, custom homes and commercial ground up.
10. Farms, Vineyards, Ranches and Agricultural Properties (25-30% down)
11. 5% down Jumbo’s with NO MI up to $2mm / 10% down up to $3mm
12. Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
13. Acreage Properties
14. Commercial Loans up to $500mm
15. 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
16. Foreign Nationals Loans (no social security or residency required)

We also offer:

1. Conventional Conforming Loans (under $510,400)
2. High Balance Conforming (from $510,400-$765,600)
3. Jumbo Loan Financing to $10 Million / Super low rates! / 10% down Jumbo to $3mm
4. FHA, USDA
5. Reverse mortgages up to $1 Million Value
6. Cash Out Refinancing

**Rates and terms subject to change without notice

We are never too busy for your referrals.

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