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Everything You Need to Know About Hard Money Loans


A hard money loan is a short-term loan secured by real estate. It is funded by a private investor rather than a bank, which is why it’s sometimes called a “private money loan.” Most commonly, hard money loans are used by property investors who need quick financing for their fix and flip projects. The reason for this is that hard money loans in NJ are faster and easier to get than conventional loans.

If you are interested in getting a hard money loan for your fix and flip project, here is everything you need to know about this type of financing.

What is Hard Money in NJ? Who is it For?

Hard money loans are mostly based on the value of the property rather than your credit score and income history. Due to this, you can obtain hard money even with poor credit. The loan amount is determined by the loan-to-value ratio (LTV), or the ratio of the loan divided by the value of the property.

Generally speaking, hard money loans are best for property investors who have purchased a fixer upper. These investors don’t have time to wait for a conventional loan, so they turn to hard money loans to provide them with the quick capital they need.

How Long Do You Have to Pay Back a Fix and Flip Loan in NJ?

Fix and flip loans are short-term loans that are usually paid off within 5 years. However, most loan are only for 6-12 months, with monthly payments in the form of interest-only or interest and some principal. Of course, terms and requirements vary from lender to lender. For example, some hard money lenders in NJ look at the investor’s experience and property type.

What are the Benefits of a Hard Money Loan?

There are a number of reasons why a real estate investor would choose a hard money loan over a conventional loan. Here are some benefits to consider:

● Fast approvals. Most property investors don’t have months to go through a cumbersome bank loan process. Hard money loans take about 2-3 weeks to be approved.

● Flexible requirements. Your credit score and income history don’t have to meet the same strict requirements for hard money as they do for traditional bank financing. In fact, hard money lenders will even work with people who have had a short sale or bankruptcy.

● Available for as-is properties. If you purchased a home in as-is condition, most banks will not approve a loan to fix it up. Hard money lenders understand this situation and want to help.

Where Can I Find a Hard Money Lender?

To find a fix and flip lender in NJ, ask around for a recommendation and do your own research online. Be sure to read reviews and get all pertinent information before making a decision. While the interest rate and loan amount are two key factors, you also want to work with a lender who has a good reputation and track record.

To apply for a hard money loan, contact First Funding Loans today. We have flexible financing programs that are designed for real estate professionals looking to buy, fix and sell properties.

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