Simple Guide To How Owner-occupied Hard Money Loans Work

Published Oct 17, 21
4 min read

Why Choose Hard Money Loans Over Conventional Lending?



Using an agent is the fastest, easiest way to sell your renovated property and make the highest return (ROI.) But some choose to go the For Sale by Owner route to save the commission. You will need to decide how you will market and sell your property as you’re considering your fix and flip loan.

Fix and flip loans come with a cost. Because they are short-term and considered more risky than a conventional mortgage loan, their interest rates are generally much higher. You can expect to pay anywhere from 8% up to 13%. You will also be expected to pay for origination, which will generally run around 1% to 3% of the loan amount.

Hard Money Loans Washington Dc - Hardmoney Company

So far, the real estate market has been steadily climbing. But some believe impending foreclosures, brought on by the pandemic, will bring on a new era of opportunity for those who want to expand or start their real estate investment portfolio. If history has taught us anything, its uncertainty usually means opportunities for those prepared to jump on them.

Be fearful when others are greedy. Be greedy when others are fearful.” Meaning, now that people are unsure of what the future holds, there may be some fresh opportunities around the corner. And learning about hard money lenders and fix and flip loans now will prepare you for those opportunities.

Hard Money Loan Calculator - Quickly Estimate House ...

With hard money lending becoming a big business in itself, your options are greater than ever. Here at Orchard Funding we specialize in a wide array of financing options, including hard money loans, and provide some of the best fix and flip loan options to fund your projects. If you’re considering getting your house flipping dynasty started and need to find a great hard money lender for your fix and flip loan, click here to get started with Orchard Funding today.

When it comes to financing a house flip, some fix-and-flip investors won't use a loan to flip a house because they prefer to use their own cash reserves. There are also some flip investors who always use borrowed capital—both to maintain liquidity and to increase cash-on-cash ROI—even if they have plenty of cash in the bank.

Loan Options To Start House Flipping

Should You Use a Loan to Flip a House? You might be questioning whether it is a good idea to add loan interest, points and fees to the cost column of your fix-and-flip project. Will borrowing money raise or lower your ROI? These are good questions to ask. The truth is, there are 3 very good reasons fix-and-flip investors use borrowed capital to flip houses: Using a loan to flip a house can help you snag the best deals In the house flipping business it is often said that "cash is king.” A fix-and-flip investor operating in a hot market has no time to wait for family members, partners or other private investors to come to the table with the cash needed to pounce on cash-only and auction deals.

The Best Hard Money Lenders and How To Get a Hard Money Loan - Hard Money  Lenders CaliforniaHard Money Loans: What To Watch Out For Rocket Mortgage


If anything sets off a red flag, they will ask for more and more documentation, prolonging the approval process. With a hard money loan, the property serves as collateral on the loan. A hard money lender is less concerned with your FICO (although good credit has its perks), and more interested in your skill as a house flipper and your track record with successful flips.

Loan Options To Start House Flipping

Hard Money Loan Lengths are Shorter While a conventional home loan is typically amortized over 15 or 30 years, with a fix-and-flip loan you will make monthly interest-only payments for a term of 6 months to two years. Many hard money lenders don't charge penalty fees for early pay off of the loan.

Fix and Flip Loans Near Me   HardMoneyHome.comHard Money Loans: Beginner's Guide - Loan Ranger Capital


For fix-and-flip loans, the as-is condition of the property is irrelevant if there is sufficient after-repair value (ARV) to justify the loan amount. Since the property is being purchased with the intent to fix it up, the property condition is expected to be sub-par and will not be disqualifying to the hard money lender.

What Are Fix And Flip Loans? [Beginner's Guide] - Loan ...

With a bank, origination fees will usually be no more than one or two points (1% to 2% of the loan amount). With a fix-and-flip loan, you will typically be charged a much higher interest rate, and two to four (or more) points for the origination fee. With either type of loan you’ll need to bring a down payment to the deal, which will typically be between 15-25% of the amount you are borrowing.

Feel free to contact us with any questions you may have about flipping houses with hard money financing, and we’ll do all that we can to answer them.

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