- How do you define "Hard Money?"
- Do I need good credit to get approved for a loan?
- How long does it take to get approved for a loan?
- How long does it take to close the loan once I have been approved?
- Should I have an investment property under contract before I fill out the loan application form?
- What is the term of the loan?
- Do I have to fill out the loan application form each time I submit a new investment property for financing?
- Do you pull my credit report each time I request a loan?
- How do I get refinanced to pay off the loan to Bluefields?
- How can I find a property you will approve?
- What is the interest rate charged?
- What "Loan to Value" (LTV) are you looking for?
- Can I get repair money to rehab my investment?
- How many investment properties can I finance at one time?
- Do I need to get an appraisal?
- How does the escrow draw procedure work?
- How much of my own money do I need to put in the deal?
- Do you require a survey?
- Do you make loans on rental property?
- Will Bluefields do an extension on my 6 month term loan?
- How much is the typical loan going to cost?
- How are the closing costs determined?
- How much will my payments be?
1. How do you define "Hard Money?"
"Hard Money" loans or "equity
loans" as they are sometimes called refer to non-conventional
real estate loans. They are usually funded by private money
sources and investors and not banks, pension funds, etc.
Interest rates and points on such loans are usually higher.
Terms usually range from 3 to 12 months. Hard Money loans
have one basic requirement. There has to be some substantial
equity in the property to give the lender a reason to invest
their funds in an otherwise risky venture.
So, why would you utilize a hard money lender? The property to be
purchased might be presently vacant and in need of repairs. It may be an
older property in a failing neighborhood which has the potential for
revitalization. It may be a foreclosure and can be purchased on a short
sale. Or you may just need a quick closing to secure a property before
you find an investor/rehabber to which you want to flip the property. Or
you may want to purchase a run down piece of property, rehab the
property, and refinance it for rental income. In all these cases, you
would need a hard money loan because conventional financing is just not
an option or it would take too long to secure. "Hard Money" is just a
cost of doing business and an effective method of doing business as a
real estate investor.
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2. Do I need good credit to get approved for a loan?
Our approval is based upon your credit score, funds available, and the
value of the property you want financed. We look at your credit to get a
feel for who is borrowing the money in order to rule out people who
obviously never intend to pay anyone. But, we also look at the value of
the property after it is repaired, the price you are paying for the
property and the cost of repairs. We look for ways to finance your
investment, not for ways to turn you down.
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3. How long does it take to get approved for a loan?
Within one or two days after you have
submitted your loan application and documentation, we can
usually make a decision.
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4. How long does it take to close the loan once I have been approved?
After your submitted property has been
approved, it normally takes around seven business days. Sometimes
more, sometimes less. Many times it all depends on how long
it takes to have a title search completed and schedule an appointment with the attorney for closing.
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5. Should I have an investment property under contract before I fill out the loan application form?
Bluefields can pre-approve you for our
loan program prior to your finding the right investment property.
Our process is two-fold: first we approve the applicant,
then we approve the investment property you are interested
in financing.
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6. What is the term of the loan?
We write 6 month loans and can extend
these loans for up to 12 months depending on your needs.
But, the object of a hard money loan is to either turn the
property quickly or have it rehabbed and refinanced with
a conventional lender. Since Bluefields does not have any
prepayment penalties, you may prepay the loan anytime you
wish prior to the term of the loan.
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7. Do I have to fill out the loan application form each time I submit a new investment property for financing?
If it has been less than six months since you were approved
for a loan with us, we do not require another loan application.
Periodically, however, we will ask you to update your financial
information for our records.
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8. Do you pull my credit report each time I request a loan?
We will obtain your credit report when
you submit your original loan application to us. After that,
we will periodically review your credit as our business partnership
continues.
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9. How do I get refinanced to pay off the loan to Bluefields?
If you are purchasing a property to rehab and rent, we can refer you to
a Bluefields Referral Partner who specializes in permanent loans and
deals with investors who own investment rental property.
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10. How can I find a property you will approve?
We can refer you to Bluefields Referral
Partners who offer competitively priced investment properties
and help you select one which we could approve.
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11. What is the interest rate charged?
We try to keep our programs simple. Our interest rate varies and
varies depending on criteria that includes borrower experience and
liquidity, loan to value, credit score, and the current prime rate.
Applicants who do not meet a minimum credit score of 660 require a
co-borrower.
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12. What "Loan to Value" (LTV) are you looking for?
Bluefields has two programs: 65% LTV, 70% LTV. Please refer to the descriptions of our loan programs for details.
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13. Can I get repair money to rehab my investment?
You most certainly can. We fund all
your repairs up to what the LTV will allow. We do require
you to complete a detailed, itemized repair list of the repair
work. An escrow draw schedule identifies the order in which
the repairs should be made. After a certain percentage of
the repairs have been completed and verified, the monies
are withdrawn from your escrow account and forwarded to you.
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14. How many investment properties can I finance at one time?
Our policy is to start with one property until we have an established
business relationship with you. As you become more experienced and have
successfully completed a few loans with us, we can look at funding
multiple properties as they are identified.
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15. Do I need to get an appraisal?
Bluefields will order an appraisal from a qualified appraiser who is
familiar with evaluating investment properties. The appraiser will
determine the "after repaired value" (ARV). You will be required to
prepay for a property inspection and appraisal.
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16. How does the escrow draw procedure work?
Each draw request will require an inspection
to ensure that the work is completed in a thorough and professional
manner. After completing a certain percentage of the required
work, you will fill out a "Draw Request Form" and
forward this to Bluefields. We will schedule an inspector
to visit your property and authorize the release of your escrow
funds.
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17. How much of my own money do I need to put in the deal?
Points may be rolled into the loan subject
to meeting our standard loan to value and credit criteria.
You will need to make sure you have money in reserve to pay
the monthly payments during the term of the loan.
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18. Do you require a survey?
Sometimes. If needed, the closing attorney or title company will provide that to Bluefields and to you.
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19. Do you make loans on rental property?
Yes, we do loans on rental property.
It is usually when the property needs to be rehabbed prior
to being rentable. When the renovation is completed, you
will need to have the property refinanced prior to placing
a renter in the property. Your "Builders Risk/Empty
Dwelling" insurance policy will not cover you or Bluefields
once the property is occupied.
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20. Will Bluefields do an extension on my 6 month term loan?
If your payments are current and repairs
are complete, we will provide extensions to your loan. The
interest rate will be increased and additional points will
be charged and collected at payoff. Please see the explanation
of our loan programs for additional details.
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21. How much is the typical loan going to cost?
All loan transactions are different.
The first loan we provide for you may be different than the
third or fourth loan. How different will depend on the particular
deal and the business relationship we have developed with
you.
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22. How are the closing costs determined?
Closing costs have always been a mystery
to borrowers unless you close numerous loans. We, at Bluefields
want you to understand where your money is going and what
costs are involved before going to your closing. Traditionally,
you might never see a HUD-1 Settlement Statement until you
get to the lawyer's office. For that reason, we will provide
you upon request a list of typical charges for the services
provided by the closing attorney. If you have any questions
after reviewing the charges, feel free to contact one of
our representatives.
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23. How much will my payments be?
Your loan is an interest only loan.
To figure your monthly payment, simply multiply the interest
rate by the dollar amount you were funded (including any
fees or costs which were rolled into the loan). Since the
interest is computed on an annual basis, you simply divide
by 12 (months) to get your monthly payment.
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Hard Money FAQs
