What is Residential Hard Money Lending?
The definition of “residential hard money” when referred to in real estate financing, is essentially a non-bankable loan on an investment single family home (or duplex). The name residential hard money is frequently interchanged with “no-doc”, private loans, bridge loans, etc… For a residential hard money loan, the underwriting decisions are based on the borrower’s hard assets. In this case the residential investment real estate would be used as collateral (via a first mortgage) for the transaction. Residential Hard money closes quickly (in as few as 3 or 4 days depending on the circumstances).
Fairview Lending is the recognized residential hard money lender (Bridge Lender/ No Doc Lender / Private lender / Non Bank Lender) with an A+ rating with the Better Business Bureau. Fairview is radically different from a bank (see table below) and also very different than other private lenders. We are direct lenders and lend our own funds and therefore have the flexibility to provide loans that make sense for the borrower. We have no upfront fees and can provide loans as long as 10 years (or longer depending on the circumstance) which provides the borrower with the flexibility they need to maximize their opportunity on a residential property.
How is Residential Hard Money different from a bank loan?
The following table summarizes the key differences in loan characteristics between a conventional bank loan and a residential hard money loan from Fairview Commercial Lending.
|Bank||Fairview Commercial Lending|
|Basis for loan approval||Income, credit score, tax returns, financials, appraisals, etc…||Residential Real estate assets|
|Minimum FICO scores||Typically 700+||None|
|Required documentation||Significant||Minimal on the property|
|Upfront fees||Appraisals, application fees, etc…||None|
|Property Type||Owner occupied and investment properties, capped on number of properties||On residential loans can only lend on investment single family homes|
|Loan Money Received||60 days +||Less than 10 days|
A residential hard money loan is a good alternative to traditional bank financing. This alternative financing is beneficial to the borrower in many circumstances. Below are just a few of the reasons when a residential hard money loan might be appropriate.
When is a Residential Hard Money loan appropriate?
- Borrowers with impaired credit (Fairview Lending can lend to borrowers with any credit including past bankruptcies)
- Tax Liens/Judgements/unpaid items etc..
- Borrowers that need funds quickly on their residential investment property
- Property repositioning (Nip the flip article)
- Time constrained borrowers/ Borrowers need a quick closing
- Borrowers in need of a stated loan due to tax returns (or lack thereof)
- Foreclosure avoidance
- Foreign Nationals
- Borrowers do not have the time or energy to jump through the multiple hoops of a conventional lender
- Complex loans with multiple pieces of collateral
- Fairview is able to handle many unique residential real estate financing needs with no upfront fees on investment single family homes.