Sand Diego Hard Money: The Perfect Source for Bridge Loans | Mortgage

Sand Diego Hard Money: The Perfect Source for Bridge Loans

by MorganA.Scott

San Diego hard money, also know as private money, can be a perfect source for bridge loans. A bridge loan is a general term used to describe a short term loan. Typically bridge loans are less than 12 months but could extend as far as 24 months.

They are used in residential and commercial financing.

Bridge loans are typically used as a stop gap measure until a borrower is able to secure permanent financing. Since these are short terms loans, they typically carry points and fees that are a great deal higher than conventional bank loans.

When a borrower needs money for a relatively short period of time, sometimes it's prudent to seek loan money from private rather than conventional sources.

The following are some examples of when someone might need hard money for a bridge loan:

1. To close a purchase fast

2. To prevent a property from falling into foreclosure

3. Refinance a loan that is coming due or approaching a balloon period

4. Need to take advantage of a situation with a short time line

5. Need to draw on equity through a cash-out loan before selling a property

6. Get a short term business loan secured by equity in your property

In order to qualify for a hard money loan, you would need to have the following.

1. Equity

2. LTV ratio (Loan to Value) under 65 percent

3. Capacity to Repay

In many situations, a property pledged as collateral may not have enough equity. In many cases the private investor may consider additional property as collateral and "cross-collateralize" several properties.

Though these loans are processed quite quickly and written for a short term of just 12 months or less, they must be fully underwritten by the lender for the borrower, the borrower's credit, and the property.

In most cases, you'll need to present the following items for a loan request:

1. 1003/Application (Lender must provide)

2. Credit Report (Lender will obtain)

3. 2-6 Months of Current Bank Statements (Borrower must provide)

4. Income Verification (Borrower must obtain)

5. Purchase and Sale Agreement (If applicable)

6. Appraisal of Property (If applicable)

7. Pro Forma (If applicable)

8. Executive Summary (If applicable)

9. Cost Break Down (If applicable)

The usual time frame for getting a hard money loan in place is about 7 to 14 business days after the lender has all of the borrower's information in hand. It should now be apparent that private money loans close far more quickly than conventional loans. Because of this, private loans are a viable solution for those in need of a bridge loan.

Ultimately, they close fast and act as a good intermediate solution until permanent financing can be obtained. Like most loans, there are little or no upfront fees for obtaining a California hard money loan. Typically all fees will be paid through escrow at the close of the transaction.

If the loan was obtained for a property refinance, fees can often be rolled into the loan. But, if the loan is for a new purchase, the borrower must be able to bring money to escrow before the loan closes.

For Example

Refinance: $100k desired loan amount, $200k property value, $10k Fees = $110k final loan amount at 55% LTV

Purchase scenario: $200k property value, $200k purchase price, down payment of $60k, $10 in fees = final loan amount of $140k, with $70k in escrow to be paid by borrower

San Diego hard money can be used for various projects. This article shows the benefits of using hard money for bridge loans. Because hard money loans can be organized quicker than bank loans, they are often used in situation where temporary financing is needed.

To make the right decision when it comes to obtaining a loan, make sure you analyze your needs and identify the possible avenues for attaining your goals.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

What you just learned about San Diego, CA Private Money is just the beginning. To get the full story and all the details, check us out at San Diego Hard Money Lender and at San Diego, CA Private Money.