Private money mortgages, often referred to as hard money loans, are financing solutions offered by private individuals or companies for real estate investments. These loans are ideal for investors who need quick access to funds, have unconventional financial profiles, or are seeking short-term financing for fix-and-flip projects, rental properties, or other real estate ventures.
Key Features of Private Money Mortgages
- Asset-Based Lending:
- Approval is primarily based on the property’s value and potential profitability, not the borrower’s creditworthiness or income.
- Quick Approval and Funding:
- Loans can close in days or weeks, much faster than traditional mortgages.
- Short-Term Financing:
- Terms typically range from 6 months to 3 years, making them ideal for projects like rehabs or flips.
- Flexible Terms:
- Private lenders can tailor loan terms to fit specific investment strategies, including interest-only payments or balloon payments.
- Higher Loan-to-Value (LTV) Ratios:
- LTV is typically capped at 65%–75% of the property’s value or after-repair value (ARV).
