Hard Money Commercial Lending
I’m commonly asked about hard money commercial lending.Many folks are confused about what it is, how it is different than traditional lending and resources available for borrowers/brokers.Fairview Commercial Lending specializes in hard money commercial loans.The loans are commonly referred to as no-doc, stated or various other names.Fairview underwrites, funds, and services all of its loans as opposed to many other companies in the marketplace that merely broker loans they originate.
What is a Hard Money Commercial Loan?
The definition of “hard money” when referred to in real estate financing, is essentially a non-bankable loan. The name hard money is frequently interchanged with “no-doc” or private loans. For a hard money commercial loan, the underwriting decisions are based on the borrower’s hard assets (real estate).There have been many questions asked regarding how lenders evaluate hard money commercial loans.I have created a FAQ page which outlines the common questions and answers (https://www.fairviewlending.com/underwriting.htm#4 ).Finally hard money loans typically close relatively quickly. Fairview Lending is the leader in hard money lending (NO-DOC / Private lending)
Hard Money verses traditional lending
Traditional loans from banking institutions rely heavily on borrowers income, credit, tax returns, etc.. as opposed to hard money’s primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically high 600 Fico and above) as opposed to hard money loans that are underwriting on the collateral as opposed to the borrower’s credit (Fairview Lending has closed loans with FICO scores in the low 400s). Along with different underwriting standards, loans on conventional commercial loans can take months to close; hard money commercial loans close much quicker. The final important differentiator between hard money and conventional financing is the interest rate. Since there is more risk in a true collateral based loan, the interest rates are higher than a conventional mortgage.
When is a hard money commercial loan appropriate?
Although hard money commercial loans are not always the appropriate solution for a client, there are numerous circumstances where a hard money loan is the best option for a client.
1. Borrowers with impaired credit (Fairview Lending can lend to borrowers with any credit)
2. Tax Liens/Judgements/unpaid utility bills, etc…:
3. Partner Buyout
4. Owner Occupied properties
5. Time constrained borrowers
6. Foreclosure avoidance
7. Foreign Nationals
8. Complex loans with multiple pieces of collateral
Below is a list of valuable resources relating to hard money commercial lending.