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What is a hard money loan?

In Miami hard money loans are a way to borrow capital without having to use a traditional mortgage lender or broker.

When financing has to happen quickly, which is often the case for Miami real estate investors, hard money loans may be the only option available.

How Hard Money Loans Work in Miami

Normal home loans require proof that you can repay them. To prove that, lenders will look at your credit score and income as evidence that you can repay the loan. Assuming those 2 items check out in accordance with the amount you're looking to borrow and the property appraises, you'll most likely be approved for the loan.

Sounds pretty simple but the process can actually, and often does, take quite some time from approval to closing, even with awesome credit scores and plenty of income. If you have items in your credit report or income that may be difficult to verify per your lender’s guidelines, this process can take even longer.

That's where hard money loans come in

Hard money loans are generally short-term loans, lasting from one to four years. You don't want to keep them any longer than that due to the interest rates as hard money financing rates are generally higher than traditional real estate loans.

So Why Use Hard Money Financing?

Speed: Hard money loans generally close much more quickly than traditional home loans. Private money lenders don't spend as much time going through a hard money loan application – verifying income, bank statements, etc. Once you have a relationship with a private money lender, the process moves quickly, giving you the ability to close your Miami real estate transactions much quicker than others which proves very valuable in markets like Miami.

Flexibility: hard money loans are typically also more flexible than standard home loans. Private lenders don't use a traditional underwriting process but rather evaluate each property individually and can even sometimes provide unique terms based on your situation.

Approval: a crucial piece of hard money loans is collateral. If you’re buying an investment property in Miami, private money lenders will generally lend you as much as the property is worth. If you borrow against another property you own, that property’s value is what is given the most weight.

When Does a Hard Money Loan Make Sense?

Miami hard money loans make the most sense for short term investments. Miami fix-and-flip investors are a prime candidate for hard money loans since they own properties just long enough to see the value increase. They typically don't utilize hard money financing for more than 1 year.

General Guidelines

  • Non-owner Occupied Only
  • Lending in AZ, CA, CO, FL, GA, HI, NC, NV, OR, SC, TN, TX, UT, VA & WA
  • Purchase, Refinance, Cash Out, Rehab
  • 75-80% LTV
  • $100K-$10 Million
  • SFR, 1-4, 5+, Condos
  • Interest Only Payments
  • Stated Income/Bank Statements Only
  • No Minimum FICO Requirements
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