Walnut Street Finance- Hard Money Loans. Fast & Easy

A hard money loan is another option for real estate investors when a traditional mortgage lender may not work for their situation. A hard money lender uses a property as a “hard” asset and collateral. There a ton of ins and outs. Let’s break it down.

Getting Started

A hard money loan is an asset-based loan. One of the biggest factors affecting the approval of a traditional loan is your credit history and income. Lenders want a candidate that possesses a reputable re-payment history because this demonstrates the consumer’s ability to repay loans.

However, it is no secret that a great credit score and a lot of income, isn’t necessarily a golden ticket to approval – the overall process can be invasive and take a long time. Private lenders utilize a different approach by lending funds based on collateral; therefore, the lender places less emphasis on credit history.

Private money loans are not for everyone, but there are several situations where these loans make sense. Thanks to Chip and Joanna Gaines, one of the biggest investment trends is flipping houses. If you’re just starting out, and do not have the capital to put up front, a private money loan makes sense – you’ll own the property for a short window so that you can remodel the property and sell it.

How Does a Hard Money Loan Work?

Generally, hard money loans are contracted for a short-term – usually between 6 to 24 months. A real estate investor would not want their loan for a long period of time because the interest rates are typically higher than traditional loans. One of the biggest benefits of choosing a private money loan is the speed at which you can close. Walnut Street Finance can close quickly in a matter of days which is essential when trying to win the bidding war on a property for your next project.

Basically, hard money loans allow real estate investors and developers the opportunity to purchase more properties and do more deals with less upfront capital which results in a great return on their investment.

How is a Hard Money Loan Different from a Traditional Loan or Direct Loan?

There are a number of factors that differentiate private loans from traditional and/or direct loans. Private money loans differ from traditional bank financing because they offer greater leverage to the borrower and they are able to close and fund deals faster than a traditional bank loan.

Speed: Most private lending companies are not as concerned with your financial position – unlike traditional and direct loan lenders which allows them to move more quickly through the loan closing process. Private lenders can close in a matter of days if the borrower is well prepared and the property doesn’t have any red flags. Speed can really be a deal breaker when multiple offers are on the table.
Adjustable Repayment Schedules: Typically, traditional and direct lenders do not have a lot of flexibility when it comes to the underwriting process. Unlike hard money lenders, private lenders have the freedom to tweak repayment schedules and other conditions, within the contract, because they are not held to strict guidelines and regulations like traditional banks.
Approval: Private lenders loan money based primarily on the value of the property. We do consider borrower credit history and experience, but our loan programs are flexible enough to work with all borrowers who have a decent deal and borrower profile.

Great Short-Term Construction Loans for Real Estate Investors

A construction loan is frequently used to finance residential or commercial new construction projects. Typical construction loans run for six months to two years, requires interest-only payments – that are often bundled into the loan itself – and are funded in installments that follow a predetermined schedule of milestones. At Walnut Street Finance, we understand the needs of builders and developers and know timelines don’t often go as planned. Construction loans are repaid when the work is complete and the property is sold or refinanced.

Whether your project requires tearing down and rebuilding a single-family home, demolishing the interior of a building and extensively renovating it, or building a home or commercial space from the ground up, Walnut Street Finance has the flexibility, expertise, and tools to be your private lending partner. Unlike a traditional construction loan from a bank, a private lender construction loan from Walnut Street Finance can be tailored quickly and effectively to your project’s specifications.

Construction loans are most often used for new construction projects and their terms are generally the longest of our short-term private money loans, allowing you time to finish the project.