Hard Money Mortgages for Purchasing or Refinancing

Today’s hard money comes in lots of flavors, one of the most common being mortgages. Using the owner’s equity in real estate, hard money lenders normally lend up to 75% of the value of the property. Typically, hard money mortgages are used for commercial purposes, but they cal also be used for residential properties. In this case, the loans are usually referred to by their more genteel appellation: non-conforming mortgages.

The lending criteria for hard money mortgages are pretty straightforward. Loans are based on the value of the ‘subject property’, real estate owned or about to be purchased by the borrower. If the borrower is buying property, the ‘value’ of the real estate is defined as the actual purchase price of the property. If the borrower needs hard money for a refinance, the ‘value’ is determined by a written real estate appraisal.

When looking for a hard money refinance loan, the lender will want to know certain things: when you purchased the property, what you paid for it, etc. If you bought a property a month ago for a specific sum, the lender will be hesitant to lend you more than the purchase price. When you’ve owned the property for about a year, and if you’ve put some money, sweat equity, or both into the property, then you can get a re-appraisal, and possibly get a loan based on the new, ‘improved’ value of the property. This is known as ‘seasoning.’ Make sure you’ve seasoned your property before looking for a refinance mortgage at a substantially higher value figure than what you paid for it.