Why Homeowners Use Bridge Loans for Residential Properties in West Palm Beach

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If you’re looking for a way to fund a residential property need, HML Solutions can assist. We offer loans for residential properties so you can can have peace of mind knowing you won’t run into delays due to lack of working capital or other financing holdups. With a residential bridge loan, you’ll have the necessary financing to borrow against the equity or your existing property, so you can purchase a new property. 

About our Residential Bridge Loans

If you’ve never made a residential real estate purchase while owning existing property, you have  never heard of a residential bridge loan before. Residential bridge loans are a specific loan product that offers short-term financing that usess a borrower’s existing real estate as collateral. When you secure a real estate bridge loan, you are doing so with the intention of purchasing a new residential property. This can help make the purchase easier, and once you’ve secured your new property, your existing property is then sold to pay off your short-term residential bridge loan.

Bridge loans are a great option if you’re a homeowner who is considering purchasing a new home due to an expanding family or changing lifestyle but you don’t have enough cash available to purchase a new home, you may be able to leverage the equity in your existing home to help fund your purchase. Bridge loans are also a viable option if you’re a homeowner who’s interested in changing residences but you don’t have the income to qualify for most conventional home loans. If, for example, you’re retired and don’t have a large enough income but you own property with a lot of equity, a bridge loan may be the perfect solution for your purchase needs. 

How Bridge Loans Work

Here’s an example of how a bridge loan works. Let’s say you own your home but you’ve outgrown it and want to upgrade your lifestyle to move into a new home with more space. However, you may not have enough extra cash available on hand to cover a down payment or all-cash offer, but you have a significant amount of equity in your existing home. As a homeowner, you could sell your existing home, find and move into temporary housing, and use the money you make from selling your home to purchase your new home.

Once your loan is closed, you can move into your home home. Or, you could secure a residential bridge loan to borrow against the significant amount of equity you have in your existing home and use those proceeds to purchase a new home. You’ll be able to live in your current home while you look for the right place to live and go through the steps of buying your new home, removing the extra step of having to move while you sell your existing home. Most residential bridge loans are funded within weeks, which will give you enough money to be a competitive buyer in today’s market.

If you choose to obtain a residential bridge loan, you’ll have enough funds to provide an all-cash offer on your new home purchase, which increases the likelihood your offer will be accepted in a sea of competing bids. Once your offer is accepted and you move into your new home, you can sell your previous home to pay off your bridge loan quickly and seamlessly. 

Benefits

Fast Financing: Bridge loans provide hard money quickly, so you can fund your residental real estate purchase quickly. In today’s market, residential bridge loans can offer you the benefit of being able to purchase your new property quickly before it sells. Because houses are selling so quickly, you should be able to rely on selling yours quickly to pay off your bridge loan in a timely manner. You can secure approval in weeks rather than months, which can be crucial when you’re trying to move on a property investment quickly. 

Efficient: Residential bridge loans are efficient. Because it taps into your existing property’s equity, it allows you to secure your new residence quickly. This can help you avoid the hassle of trying to sell your current home and moving into a rental or temporary dwelling while you go through the traditional home loan process. With a bridge loan, you can move once, which saves time, hassle, and unnecessary moving expenses. 

Less Hassle: With a bridge loan, you won’t be required to prove your income as part of the qualification process. This is because residential loans don’t require the ability to repay loan term that most conventional home loans request, because you’re leveraging your existing property as collateral to pay off the loan once it’s been sold. If you’re self-employed, retired, or lack the necessary income to qualify for a traditional home loan, this is a great option to cut out the hassle. We also work with you if you have a poor credit history or past credit issues such as bankruptcy, loan modifications, or foreclosures. If you’re financially stable and have sufficient equity in the home you’re providing as collateral, we can work with you on your hard money bridge loan to find a solution that works. This is because as asset-based lenders, we’re concerned about the value of the property in question rather than your past credit issues.

Provides Leverage: When you secure a bridge loan, you’ll be able to have more leverage when making an offer on a potential home. Typically, all-cash offers are viewed as the most attractive option to sellers because they remove contingencies from the selling process. If you come in with an offer that’s contingent on the sale of your home before being able to complete your offer may be less likely to be accepted, especially in a competitive real estate market. Because you may not be able to sell your home to come up with the cash to put down, it can make for a shaky real estate transaction. With a bridge loan, you have the money you need upfront for an all-cash offer or large down payment.

Hard Money Bridge Loans

With a hard money bridge loan, we can fund your residential bridge loan request quickly and efficiently. If you are looking to secure a bridge loan for an owner-occupied property, we can handle the approval process in as little as 2-3 weeks. If you’re looking to fund a residential bridge loans on an investment property,we can assist with funding in as little as 5 days. If the loan amount you’re requesting maintains at least 25-30% of the overall equity in your property, we’ll be able to fund your loan quickly.

When you work with financial institutions that offer bridge loans as part of their loan portfolio, they must consider the value of the real estate and overall equity, but in many instances they also focus on the borrower’s income and past credit history. These can be used as leverage to increase interest rates or result in denials. It may also slow down the process, which can cost you time and possibly your dream home. While we look at your home’s overall equity, we don’t worry as much about your past credit and any delinquencies, loan modifications, or bankruptcies you’ve had. We can approve hard money loans in half the time of traditional banks by cutting out the extra steps in the loan process. 

We believe that just because you’ve had bad credit or issues on your record such as short sales, bankruptcies, foreclosures or loan modifications, it doesn’t mean you can’t qualify for a bridge loan. If your home has equity, we can look past these issues to help you secure a bride loan.

Even if you’re self-employed or have changed careers and have had issues in the past obtaining a loan from a traditional lender due to the inability to prove your income, we can assist you with the hard money bridge loan process. While most lenders require you to provide two years of employment history, we simply assess your property to see if it has adequare equity to use as collateral. 

Rates

When you work with a traditional financial institution, you may find that they tend to shy away from offering residential bridge loans because they prefer long-term loans. Since bridge loans are meant to provide short-term financing, it’s less profitable for traditional banks in the long run, which can affect their balance sheet. 

When you work with HML Solutions, you’ll find the interest rates on our residential bridge loans vary from 8-10%. Your bridge loan terms can vary depending on the factors such as the location of your property and the loan-to-value (LTV) ratio you requested. 

While you may be able to find a lower interest rate by choosing to work with a traditional financial institution to fund your residential bridge loan, you’ll find the approval and funding process will take much longer than if you worked with us. That’s because most banks spend additional time scrutinizing your income, credit scores and any past issues you you may have had which could affect your credit or ability to repay your loan.

HML Solutions is ready to assist you with your residential property financing needs, so get in touch with a member of our team today to learn more about our loan process. We’ll answer your questions, provide a financial consultation, and walk you through the application process from start to finish, so you can receive the necessary funds to manage your purchase needs. 

Loan Approvals for Bridge and Hard Money Financing

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Real Estate is Booming in Florida

The state of Florida has been a residential destination for many people for decades. With the increasing number of people working from home, this sunny state has become even more popular. Who doesn’t want to take a break from work to look out their window at the picturesque Florida landscape? It is also a popular destination for thousands of domestic migrants each year who come to join the vibrant multicultural community that Florida is home to. The fact that Florida has no state income tax only increases its appeal even more.

For all the reasons listed above, investing in Florida real estate is a great choice for real estate professionals, investors and developers. With demand for housing vastly outpacing supply, vacancy levels as low as 6% and interest rates that are expected to remain low for some time, existing structures and new construction in Florida are almost guaranteed to sell. There is a growing demand for single-family homes and an even greater demand for multifamily properties and vacation homes. The expected revenue in the vacation rental industry is expected to reach nearly $90 billion in the next couple of years. There is no indication that the Florida real estate business is going anywhere but up in the near future. The real challenge for investors is locating a funding source that will move at the same hectic pace as the Florida market.

Real Estate Financing That Works for You

When you are looking to finance a real estate purchase in the stunning state of Florida, you have very specific needs. You need a financing option that is quick. Standard loans can often take weeks to process and when you are in a bidding war with another investor, you simply don’t have the time to wait. You need a loan that is flexible in purpose so that you can utilize funds for a variety of reasons. Traditional loans are frequently limited to a specific purpose and cannot be used for anything else. You also need a lender who grasps the potential value of the property you are seeking to own. Traditional banks are often only interested in lending funds to purchase a property that has already achieved its highest value.

A hard money loan with a reputable private lender may be the perfect solution for your financing needs. At HML Solutions, we have established a reputation for excellence in the financial sector in Florida, and we stand ready to guide you through the hard money loan process. Like you, we are experts at what we do.

Hard Money Loans 101

Here in Florida, the real estate market is extremely competitive. Hard money loans are often used by real estate investors and developers interested in fix and flip possibilities. They can also be an avenue of financing for individual homebuyers unable to secure a standard bank loan. In general, these are short-term loans used to finance projects that are intended to have a limited turnaround time frame.

These loans have a short repayment term, usually coming due in a year which is the typical time needed to fix and flip a property. We can discuss the possibility of longer-term financing for projects expected to have an extensive development period such as may occur with large scale construction projects or multiple unit projects requiring extensive refurbishment. We offer industry-standard interest rates, but you should know that because of the nature of this kind of financing, rates will be somewhat higher than a traditional loan.

During the term of your loan, you will make payments on the interest only, giving you more free capital to dedicate to your investment property. Once you have resold your property, you will use your profit to repay the principal of the loan in one bulk sum.

When you work with us we will provide a detailed repayment plan that will include your loan principal, any additional fees, accrued interest as well as a clearly designed repayment schedule so that you can plan your budget and project timetable to align with your financing. With a great lending partner and a good plan, you should be able to see the profits from your property well within the term of your loan.

Typically, a hard money loan will be able to provide up to 70% of the after repair value of a property which means that you will need to show that you have the ability to cover the other 30%. If you do not currently have a plan in place to be able to cover the remaining 30%, we can discuss how you can provide that security through other means such as leveraging other properties that you may own.

Property Value is More Important Than Your Credit Score

There is no need to be anxious about your financial standing when seeking loan approval for a hard money loan with us. Unlike traditional loans with a public lending institution, hard money loans are assessed on the value of the property you intend to buy rather than on your credit history. Instead of mountains of paperwork detailing your personal banking status, here are a few examples of valuable data you can bring to our first consultation:

  • Bring documentation of past successful projects that you have been involved with; your experience has value. We understand that your past successes are a clear indicator of probable favorable outcomes in the future.
  • Provide documentation that illustrates the value of the property you wish to buy and the projected value that you intend to add to it after renovations.
  • Show data about the neighborhood that surrounds your property; location remains paramount in the real estate industry. 
  • Include information about the history and projected future value of real estate in the area. 
  • Draw up a detailed budget for the project including construction and renovation costs. Your budget will give us a clear understanding of your investment as well as a clear indication of your ability to manage the project.
  • Attach contractor bid sheets for necessary remodeling and restoration.

We can help you to understand what documentation you need and are happy to walk you through these requirements, but because of the fast pace of the Florida real estate market, we would encourage you to have your documentation ready when you arrive for your first consultation with us. The sooner your documents are available, the quicker we can begin to process your application and get your loan approval. Speed is what will give you the upper hand in the highly competitive environment of the Florida real estate market.

Our Expertise Sets Us Apart

Not all hard money lenders are the same. You want to be certain that you are seeking loan approval from a financial partner that you can trust. So we want to encourage you to investigate our expertise and reputation. Here are a few things you should check out before you decide to work with us:

  • We encourage you to take a moment to peruse our website. You will find information that will give you insight into who we are and the many loan programs we have to offer, as well as detailed information on how you can reach us. Any lender who doesn’t have a robust website might have something to hide. You should never need to struggle to find information about your lender.
  • You will find that when you contact our office, your point of contact will always be a real human being. We pride ourselves on personal interactions and developing relationships with our clients. If you can’t get anything but an automated system when you contact a lender, that doesn’t bode well for future communication.
  • We don’t believe in one size fits all financing. Your circumstances are individual to you, as are each of your real estate projects. A lender that only has experience in one particular niche of loans may not be able to help you design a loan program that is best for your needs. You want to choose a lender who has experience with many different types of real estate financing. You’ll find that we have expertise in a vast array of lending choices, giving us the ability to understand exactly what you need for each of your projects. 

Reach Out To Us Today

At HML Solutions, we successfully fund commercial real estate transactions and projects throughout Florida. Tell us about your proposed project and let us outline the hard money loan programs that we can provide to your business. We will make certain that you are clear on the details of our loan programs and on the documents you need to provide to move forward. One of the many benefits of a hard money loan is the speed at which you can move through the application and approval process. What it may take a conventional bank many weeks to do, we can accomplish in a matter of days. Once approved, your funds will be in your hands quickly, allowing you to take the upper hand in your property negotiations and close your deal rapidly. Contact us today and let us help you make your real estate investment goals a reality with our bridge and hard money loan solutions.

How To Use Hard Money Loans to Refinance Your Mortgage

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If you are thinking about refinancing your home or other real estate mortgage, you may want to consider more options than just conventional mortgages. There are many other types of real estate loans, each with its own benefits and drawbacks. A hard money loan may be the answer for your real estate refinance.

Hard Money Loans

A hard money loan is a type of short-term loan that is characterized by fast timing and relaxed regulations compared to conventional loans. In many cases, hard money loans are funded by private lenders or investment groups rather than traditional institutions like banks. Hard money loans are collateralized, typically by real property.

Often, hard money loans are used by real estate investors such as people using buy-and-hold or fix-and-flip strategies. Due to the relaxed requirements, hard money loans can be offered as interest-only loans in which the principal is paid in a balloon payment at the end (this is ideal for real estate investing). They can also be offered based on the after-renovation value of a property (this is ideal for fixing and flipping).

Reasons To Consider a Hard Money Loan

There are a few reasons that borrowers consider using hard money loans. The most common is that they would not be able to qualify for a conventional loan or because they would not be able to receive enough money through a traditional mortgage. As mentioned, hard money loans are significantly more flexible with their qualification requirements and structure. Therefore, it can be a great option when a conventional loan can’t fully satisfy your financial needs.

Another good reason to consider using a hard money loan is the speed. If you need to move quickly, you can usually get funding a lot faster with a hard money loan. Whereas a conventional loan may take months to process and close, a hard money loan could be completed in weeks or even days. These characteristics can make hard money a useful option when you need to refinance.

Who Should Use a Hard Money Loan

There are a variety of situations that may call for a hard money loan, whether to refinance or otherwise fund a real estate project. These are some common types of borrowers for these loans:

  • Fix-and-Flippers: Various real estate investors, especially those using fix-and-flip strategies often use hard money loans to help fund both buying and renovating properties. Hard money loans can offer a more flexible valuation than conventional loans, allowing people to borrow against the after-renovation value of the property.
  • Borrowers With Less-Than-Ideal Credit: People experience challenging financial straits at times. If you have less-than-perfect credit, you may want to consider a hard money loan. This applies whether you are buying a home or refinancing an existing mortgage. Hard money lenders can typically work with more potential borrowers.
  • Homeowners Who Need Equity From Their Homes: Sometimes homeowners need to access the equity in their homes quickly. This may be due to needing a major repair or because they are facing foreclosure. Whatever the circumstances may be, using a hard money loan can help you to tap into that equity right away.
  • Homeowners Who Want To Refinance Quickly and Easily: As a homeowner, choosing to refinance your mortgage can potentially help you save a significant amount of money. You can also do a cash-out refinance which helps you get some extra money to spend on your home or other needs. In either case, being able to proceed quickly and with fewer requirements may be an attractive option.

Overall, hard money loans can be valuable tools for many different types of borrowers. Anyone who wants to harness the benefits of hard money lending should consider using one.

Benefits of Using a Hard Money Loan To Refinance

There are three major benefits to using a hard money loan. Each of these can be applicable to your mortgage refinance.

1) Flexible Qualification Requirements

It is no secret that the best terms for conventional mortgages are reserved for very well-qualified borrowers. However, if you have somewhat less-than-ideal credit, you may find it difficult to qualify for a conventional mortgage refinance. This can be a problem for anyone who needs to either cash out with a refinance or wants to refinance for better terms.

Part of the reason for this is that conventional mortgages from traditional lending institutions are highly regulated. They have more complex approval processes and are limited in the terms they can offer. Therefore, the qualification requirements are quite strict.

Conversely, hard money lenders have to comply with far fewer regulations. They can offer money to people who may have difficulty qualifying otherwise. When you need to refinance, you need to refinance, even if traditional banks aren’t keen on working with you. A hard money loan may be the answer that you are looking for.

2) Fast Funding

The process for conventional mortgages can take months to complete. When you are in need of financing as soon as possible, the delay between your application and receiving funding through a conventional refinance could be potentially devastating.

For example, sometimes homeowners need to refinance and access some of their equity when facing a foreclosure. Alternatively, if your home has a sudden maintenance emergency such as a tree falling on the roof, termites or flooding, and your insurance won’t cover it, you may need to get some money quickly to ensure that your home remains inhabitable.

Hard money lenders have a much simpler process for approving loans. Again, they have to deal with fewer regulations and requirements than conventional lenders. Thus, you can get approved and funded for your refinance more quickly than would otherwise be possible. The process may take only days or weeks instead of months.

3) Flexible Terms Available

In the same way that hard money lenders can be more flexible about who they approve, they can also be more flexible about what they approve. The approval process is based primarily on your equity, which can include more than just the property you are refinancing. Depending on what you need the money for, the lender may be able to be more flexible with your loan terms.

For example, you want to refinance a property to help with renovations. Some hard money lenders will be able to let you borrow based on the after-renovation value. Hard money loans have a lot more room for negotiation and deal-making.

Drawbacks of Using a Hard Money Loan

Of course, hard money loans are not some sort of panacea for your financial needs. Like any other business, hard money lenders want to mitigate risk and increase their upside. Therefore, choosing to refinance with hard money may not always be the best option. These are some of the drawbacks:

  • Cost: The interest rates and fees associated with hard money loans are usually much higher than conventional loans. This doesn’t always mean that the loans are more expensive because they also have shorter terms. However, you should be prepared to deal with elevated costs.
  • Loan-to-Value Ratios: The loan-to-value ratios on hard money loans are typically more conservative than those available for conventional mortgages. This may not be a major issue for a refinance; however, it can be an issue if you need to get every bit of equity out of your home.
  • Short Terms: As mentioned, hard money loans always have shorter terms than conventional mortgages. Whereas you may be able to get a 30-year term for your traditional mortgage, a refinanced hard money loan will have a term of a few years at most, typically. Therefore, it may be less ideal to refinance this way if you want to be paying back the loan for a long time.

What You Need To Know About Hard Money

Hard money lenders have fewer regulations to deal with than traditional lending institutions. However, this does not mean that they can do whatever they want. By law, they must establish that all borrowers can realistically repay the loans. This includes dealing with any balloon payments. Due to the short terms, it is not likely that borrowers’ financial situations will change significantly between the application and final payment. Therefore, be prepared to show that you have the ability to repay.

It is also important to note that there are many different types of hard money loans and lenders. Not all lenders will offer refinances and even those that do may not offer cash-out refinance loans. Make sure to discuss your financial goals with any potential lender to understand whether it will be able to satisfy your needs. Some lenders may be more focused on commercial properties while others also work with residential borrowers. Make sure you find the right lender for your unique needs.

Learn More

Discover more about refinancing your home with a hard money loan today. HML Solutions may be able to help you with your home refinance needs. We work in Florida, the Bahamas, the Caribbean and Jackson, Mississippi. Contact us today to learn more about how we may be able to help with your refinance. We will get you started with a free consultation.

Financing Self Storage Facilities in South Florida With Bridge Loans

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If you own a self storage facility, you have many financing options. However, the traditional route may be cumbersome and take more time than you prefer. Fortunately, you can get bridge loans through HML Solutions. This alternative financing is fast, flexible and doesn’t require the same level of paperwork to qualify.

What Is a Bridge Loan?

Bridge loans are short-term financing options meant to bridge the gap between the cash you have on hand and the profit you expect in the near future. They’re often used to purchase an investment property or even owner-occupied housing. However, their uses aren’t limited to real estate.

What Are the Benefits of Bridge Loans?

One of the biggest benefits of bridge loans is how quickly you can get approved. Most business loan applications take a month or more to get approved because banks need to review and verify financial information. In contrast, bridge loans require much less paperwork, which means a faster approval time. You can get cash in only a few weeks, which allows you to jump on fleeting business opportunities.

No Prepayment Penalties

In most cases, lenders don’t charge prepayment penalties on bridge loans. Since this financing is short-term, this is a massive boon, as you can save on interest by paying off the loan before it ends. In fact, bridge loans are designed for a large payoff once the borrower makes a profit.

Interest-Only Periods

Many bridge loans begin with an interest-only payment period. While this means nothing goes toward the principal unless you overpay, it also means you have time to earn the money needed to make the payoff.

Short Loan Terms

Some business loans can last between five years and a decade, but that timeframe isn’t always useful to investors. Bridge loans typically last between 18 months and two years, so they’re the perfect option if you want short-term financing.

How Can You Use Bridge Loans To Finance Self Storage?

So, how does a bridge loan help you expand your self storage business or otherwise turn a profit? It provides working capital, so you have the freedom to pursue your interests. While there are many ways to do this, future development, property investment, and business acquisition are the most common.

Future Development

To expand your enterprise, you can use your storage facility as collateral for a bridge loan. Once you’ve obtained the funds, you can build a new location to generate the revenue needed to pay off the loan.

Investment

You may be interested in improving what you already have. With a bridge loan, you can upgrade your facility and turn a profit even as you invest. Improvements should increase the value of your business so you can profit if you sell.

Acquisition

Bridge loans can also be used to purchase existing businesses. Once you take over operations, you can put profit toward paying off the loan.

Where Can You Find Hard Money Financing?

HML Solutions can help you find the perfect hard money loan for your situation. Whether you want to purchase a new facility or expand the one you have, we can provide working capital. For more information, give us a call today.