San Diego Hard Money: The Perfect Source for Bridge Loans

by Morgan A. Scott

San Diego hard money is also called private money, and can be an ideal
source for bridge loans. A bridge loan is another name to describe a short term loan. Bridge loans are usually repaid in under one year, but the repayment deadline can extend as far as two years.

These are used for commercial and residential financing.

Bridge loans are typically used as a stop gap measure until a borrower is able
to secure permanent financing. Since these are short terms loans, they
typically carry points and fees that are a great deal higher than
conventional bank loans.

When a borrower needs money for a relatively short period of time, sometimes it's prudent to seek loan money from private rather than conventional sources.

The following are some cases in which a person may use hard money for a bridge loan:

1. To close a purchase fast

2. To keep a property from being foreclosed upon

3. Refinance a loan that is being called due or reaching a balloon period

4. Need to take advantage of a situation with a short time line

5. Realizing equity before the sale of a property through a cash out loan

6. Have equity in a property and need a short term business loan

In order to qualify for a hard money loan, you would need to have the following.

1. Equity

2. Loan to Value (LTV) of less than 65 percent

3. Ability to pay the loan

In many situations, a property pledged as collateral may not have enough
equity. In many cases the private investor may consider additional
property as collateral and "cross-collateralize" several properties.

Though these loans are processed quite quickly and written for a short term of
just 12 months or less, they must be fully underwritten by the lender for the borrower, the borrower's credit, and the property.

In most cases, you'll need to present the following items for a loan request:

1. 1003/Application (Lender will provide)

2. Credit Report (Obtained by lender)

3. 2-6 Months of Recent Bank Statements (Borrower must obtain)

4. Income Verification (Borrower must obtain)

5. Purchase Contract (If applicable)

6. Property Appraisal (If applicable)

7. Pro Forma (If applicable)

8. Executive Summary (If applicable)

9. Cost Break Down (If applicable)

Typically, a hard money loan can be completed approximately 7 to 14 working days after the lender has received all of the information from the borrower.
As you can tell, private money loans close much more quickly than conventional ones. This is why they are a good alternative for those who seek a bridge loan.

Ultimately, these types of loans close faster and are a good option for bridging the gap until permanent financing is in place. As with many loans, there are typically few or no fees that must be paid up front when it comes to a California hard money loan. Loan fees are paid through escrow when the transaction closes in most cases.

If it is a refinance loan, then the fees usually can be financed back into the loan. If it is a purchase loan, then the borrower will have to bring money into escrow before the closing date.

Example

Refinance: $100k desired loan amount, $200k property value, $10k Fees = $110k final loan amount at 55% LTV

Purchase example: $200k property value and purchase price, with a $60k down payment, $10k in fees, final loan amount of $140k, and borrower to pay
escrow $70k

San Diego hard money loans can be used for a number of purposes. This article explains the advantages of using hard money for bridge loans. Since hard money loans can be put together faster than bank loans, they are a common solution when temporary financing is necessary.

To ensure that you make the best loan decision, evaluate your situation thoroughly and come up with several possible paths for achieving your goals.

You'll never have to worry about San Diego Private Money again! Visit us on the web at San Diego Hard Money Investor or at San Diego Private Money to learn more.