The beauty of an equity-based hard money bridge loan is the speed at which they can close, which often happens in 3-5 days.
This is pretty good compared to today’s conventional lending environment, where nearly every mortgage is being sold off to Fannie Mae and Freddie Mac, or insured by FHA and the VA. Government loans usually take 25-45 days to close as underwriters scrutinize every financial detail in an applicant’s previous two years of existence. They are looking for anything that could lead to a future loan default. Or worse yet for the underwriter’s employer, the underwriter missed something, the loan defaulted, and the lender was forced to buy back the loan from from Fannie or Freddie. Buy backs can be pretty costly.
Hard money bridge loans are a completely different animal. They are equity-based loans with very little personal financial scrutiny. Lenders base their underwriting decision on the value of the collateral versus the likelihood of on-time payments five years into the future.
Hard money loan borrowers may not be flattered by the loan terms, including interest rate and origination fees, but when they can have access to the capital within a few days rather than a few months, they often change their tune. Being able to use fast closing hard money financing in order capitalize on another investment opportunity often makes a lot of sense to business people and active real estate investors.
That was the case on this equity-based hard money bridge loan in Orange County. The borrower had an opportunity present itself and needed to move quickly before the opportunity was gone. Fortunately, they owned a free and clear rental property and were able to get a 30% Loan-to-Value (LTV) hard money cash-out loan within four days from application to loan disbursement.
Equity-Based Hard Money Bridge Loan Terms:
- $250,000 Loan Amount
- 12-Month Term
- No Prepayment Penalty
- No Upfront Fees or Appraisal Required
- Lender Site Visit took Five Minutes