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Borrower Program Advantages

Hard money loans are loans collateralized by equity in real estate. Generally used for business purposes, hard money loans are often used as bridge financing for real estate investments, business real estate asset purchases, refinancing and foreclosure help.

Hard Money Loans have three distinct advantages over bank loans:

  1. Hard money loans can be closed (funded) quickly.
  2. Lending decisions are made based more on the value of the real estate than on the financial status and credit of the borrower.
  3. Hard money lenders have less lending criteria and will fund projects that traditional banks and lenders will not.

In exchange for taking greater risks and funding so quickly, expect to pay substantially more than you would for a traditional mortgage. Hard money rates range from 11% to over 20%. Points generally run between 5 and 15; the greater the risk in the project and/or the borrower, the higher the price.

Making a Hard Money Request

Providing clear information about the property you wish to collateralize for a hard money loan will help you get answers fast. When making a hard money request, include the following:

FOR A PURCHASE, INCLUDE:

  • The purchase price of the property
  • Purchase agreement between you and the seller
  • A recent written appraisal within the past 6 months. Don’t guess at the value—you can’t get hard money funding based on your guess (must be a Northwestern Financial approved Appraiser)
  • Hard money will get you up to 55% of the purchase price. Explain where the rest of the money will come from. You will need to come up with the closing fees and must have a vested interest in the property. A down payment, secondary financing or culmination of the two may be used to satisfy the balance.

FOR A REFINANCE, INCLUDE:

  • The price you paid for the property initially and the date you bought it
  • A recent written appraisal – within the past 6 months (must be a Northwestern Financial approved Appraiser)

FOR EITHER KIND OF HARD MONEY REQUEST, INCLUDE:

  • A personal or corporate financial statement with your assets and liabilities listed
  • If the property is income producing: cash flow information may be required. The hard money lender will want to see that you can afford the loan you are asking for, pay your other bills, and still have a few dollars left at the end of the month.