Frequently Asked Questions about Hard Money Loans
Maryland Private Mortgage is the leading direct private mortgage lender of private money rehab loans in the state of Maryland. As a leading Baltimore City expert in hard money lending, we know all the ins and outs of the industry. This means, we’ve heard just about every question you can think of when it comes to hard money rehab loans. To help you find the answers you seek, we’ve compiled this quick FAQ on hard money loans in Maryland.
What is Hard Money?
A hard money loan is an asset-based loan commonly used for fixing up and flipping homes. These hard money loans differ from traditional loans because they are based on the value of a “hard” asset (such as a property); as apposed to a traditional loan which will be based on the borrower’s income, credit check, bank statements, etc.
What are Rehab Loans?
A rehab loan is used primarily in the fixing up or “rehabilitation” of a home or building. These types of loans are used by businesses, contractors, commercial investors, or anyone looking to fix-up a home and then resell it—usually within the same year. Rehabbers and fixer-uppers commonly use hard money rehab loans because it gets them the money they need quick so they can flip their property for a profit.
Why Use Hard Money?
Hard money loans are ideal for borrowers who need to quickly raise money to close a deal in a competitive market. Another reason to seek a hard money loan is because they offer more flexibility than a traditional loan because you’re working with a local lender as opposed to a large corporate bank. In fact, we commonly refer to hard money loans as private money rehab loans because the lender is a private company or person as opposed to a large bank.
What is a “No DOC” loan?
No-Doc loans, also known as Low-Doc loans or Doc-Lite loans require minimal to no income documentation from the borrower.
What Are Your Loan Terms?
Our private money loans are interest only in an effort to keep payments to a minimum—and we have no pre-payment penalty. Typically our loans are structured to be repaid within 12 months; but we commonly do loans for 12-60 months.
What are your Down Payment Requirements?
Our typical down payment requirement is anywhere from 10% to 20% of the contract purchase price. Seller concessions are allowed.
Do you Charge a Pre-Payment Penalty?
We do not charge a pre-payment penalty on our private money rehab loans. That said, some exceptions may apply for certain special loan scenarios.
What is the Max Loan to Value (LTV)?
We lend up to 65% of the “After Repaired Value”.
How fast can you close?
Our usual turnaround time for closing hard money loans in Maryland is 10 business days.
How do I apply to Get Pre-Qualified and a “Proof of Funds” letter to shop for offers?
To get pre-qualified, fill out our hard money loan application. Print, sign, and mail in this authorization form with an application fee (one for each applicant, married couple’s complete one each). Also include a cover sheet of any relevant or useful information we should know about to better qualify you. It’s is also recommend to include on this cover letter any special circumstances you would like share with us about your particular project.
What is the Loan Application Fee?
Our application fee is $35, $55 for a married couple. This fee helps cover the costs on our end of double-checking and processing the paper work.
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The Maryland Private Mortgage Lending Team