Fullerton, located in North Orange County, is one of the California cities with an outstanding quality of life. The mix of commercial, residential, cultural, industrial and educational opportunities makes Fullerton the place to call home or invest in property.
For some Fullerton residents, they may not be able to invest in property here or own a home. Poor credit scores, too much debt or low income may be the reason why credit unions and banks won’t lend to them. If you are in this group or an investor who needs money fast, a hard money loan may be your option.
A Hard Money Loan is a Type of Real Estate Loan
A conventional mortgage is one offered by banks with specific terms and 15, 20 or 30 years to repay. The conventional loan is given by credit unions and banks. A hard money is different. It is a private, short-term loan offered by investors and lending companies. Their specific terms may vary and two to five years to repay. Borrowers seeking hard money loans should know which type of loan they want such as:
• Owner-occupied loan for borrowers who can’t get a traditional mortgage and want to live in the property.
• Fix-and-flip loan for borrowers who plan to rehab their property, then quickly sell it to repay the loan.
• Construction loan for real estate borrowers who need to quickly get started on a new construction project with the goal of refinancing or selling the property quickly.
• Bridge loan for borrowers who want to quickly purchase a property with the goal of selling it or refinancing it. Their immediate goal for the property is to allow someone else to purchase a new property now, before getting the proceeds for a currently owned property.
Hard money lenders do consider the same requirements as banks such as credit scores, debts and income. However, the lenders do not make their decisions solely on those factors alone. They are more interested in basing their approval on the value of the property that’s put up for collateral.
Terms of a Hard Money Loan in Fullerton
Another difference between hard money loans and traditional mortgages is flexible terms. Hard money lenders will generally work with borrowers to create terms that work with their finances. This is known as a customized hard money loan. The loan does include an interest rate. The interest rate is typically higher than mortgage interest rates.
The number of payments for hard money loans varies. However, all hard money loan terms include a balloon payment. This payment is the last payment and includes the balance of the loan and any interest or fees on the loan. Some hard money lenders do not allow a borrower to pay the balloon payment early without paying an additional fee.
Down Payment Needed for a Hard Money Loan
One requirement to secure a hard money loan is a down payment. Hard money lenders require a borrower to have a 20 percent down payment to secure their loan. The down payment depends on the value of the property or the value after the repairs are completed. For example, a property valued at $200,000 will require a $40,000 down payment to secure the loan.
Obtain a Hard Money Loan for Your Fullerton Property
It’s time to let the banks and credit unions stop holding the financing. If you need money fast for an investment property or looking for a way to obtain financing for a home, contact us. As a hard money lender, we are ready to assist you in financing your investment with a hard money loan. Contact us today.