Hard Money Loans in Kansas City
HARD MONEY LOANS QUICK SUMMARY
- AMOUNT OF FINANCING AVAILABLE
Typically up to 65% of After Repair Value
- MINIMUM QUALIFICATION CRITERIA
620+ credit score depending upon what you will be doing with the property after rehab
- PAPERWORK YOU HAVE TO SUBMIT
Contract of sale, repair estimate, recent tax returns, recent bank statements
- INTEREST RATES
12 – 16%
3 – 6% of the sale price of the home is paid at closing
- TIME TO GET APPROVED
5 – 7 Days!
WHAT IS A HARD LOAN?
Hard Money Lending is the principal form of financing that new house flippers will use. Hard Money loans are ideal for novice home flippers because they care more about the property and its potential value than about the borrower’s experience or financial qualifications.
In general, hard money loans are the easiest to qualify for because no prior experience is necessary. The qualification requirements vary from lender to lender, but most hard money lenders require a personal credit score of at least 620, a debt-to-income ratio (monthly debt payments/gross monthly income) under 35%, and no recent foreclosures or bankruptcies.
Hard money loans are usually 1-6 month loans. The reason why the term is so short is because the process of buying a house, renovating it, and selling it typically takes less than 6 months. The loan is paid back with the proceeds from the sale of the home. Until the home is sold, you pay only monthly interest payments.
INTEREST RATES & FEES
Interest rates are in the range of 12 – 16%. On top of that, you will have to pay 3 – 6% of the sale price of the home to the lender at closing. The longer you take to sell the home, the higher the fee you will have to pay. Keep in mind that you’re not paying the interest for very long, since you can usually flip a home in less than 6 months.
AMOUNT OF PURCHASE PRICE YOU CAN FINANCE
Most hard money lenders provide financing for up to 65% of the After Repair Value (APV) of the house. You need to make enough profit from the sale of the home after paying for renovations, interest and fees, closing costs, etc. Ideally, the loan should cover the full purchase of the price of the home, and you should have some funds left over for the renovation. First time flippers may receive even less than 65% ARV since they don’t have a track record yet.
For example , suppose you want to buy a $100K home that requires $30K worth of renovations, and you estimate it will sell for $200K after the renovations. A Hard money lender would loan you $130K (65% of the $200K ARV). You would only have to bring the closing costs and fees to closing unlike a banks that charges 20% of the purchase price to be put down leaving the investor paying for the 20% of $100K AND the $30K repair costs.
Why Choose Us?
- Family Owned & Operated
- Local Fix & Flip Finance Experience
- All Credit Scores Considered
- Close in 7-10 Business Days
- Short Term Loan for Investment Projects