Everything You Need To Know About Hard Money Loans in Palm Beach, FL

To make money, you need money. That’s true whether you’re looking to purchase inventory at great prices or planning on selling a luxury condo at a fantastic profit. Palm Beach abounds with great opportunities for making money, but first you need the capital to cover the cost. That’s where hard money loans in Palm Beach, FL can be your ticket to success.

Hard money loans can help you get the capital you need exactly when you need it. That way, you can take advantage of smart real estate opportunities as soon as they appear. Going through traditional lenders is often time-consuming and qualifying can be difficult. A hard money loan from HMLS lets you get around these hassles and reach your goals as quickly as possible. But just what are hard money loans and why should you consider them?

Hard Money Loans: The Basics

In simple terms, a hard money loan is one that uses collateral instead of your credit score as the main factor in backing the loan. Offering loans always carries some risk for banks and other lenders, because the person getting the loan may not pay it back.

That’s why, normally, lenders set high credit score requirements to limit the risk of losing their money. Unfortunately, this eliminates financing options for many business owners in Florida because few companies actually have stellar credit all the time.

Hard money loans bypass this credit requirement by using property as collateral. When a business wants to buy a piece of construction machinery, for example, the equipment itself acts as collateral, or loan security. The same thing happens with hard money loans for real estate. The property acts as collateral for the loan. This type of collateral works for pretty much any type of real estate:

  • Office buildings
  • Retail stores
  • Investment properties
  • Medical/dental offices
  • Condos
  • Outdoor malls
  • Restaurants/coffee shops
  • Automotive dealerships

These are just a few examples of real estate you can use hard money loans for. The main requirement is that the property is valuable enough to cover the cost of the loan, closing costs and other expenses.

Options for Hard Money Loans in Palm Beach, FL

In Palm Beach, most hard money loans revolve around real estate properties. The housing market is valuable and provides amazing benefits for buyers, sellers, real estate developers and house flippers alike. The way you use the money often depends on if it’s a buyers’ market or a sellers’ market, as well as the connections your business has.

For example, in a sellers’ market, you can get top dollar for investment properties that you’ve been hanging onto. In this type of market, it may be worth performing additional renovations on luxury homes to make them even more attractive to buyers. A few relatively small additions, such as an outdoor kitchen or lanai, can provide major profits. Hard money loans help by giving you an extra push of financing for this type of remodeling projects, which is something that traditional banks wouldn’t even consider.

The same thing goes when you have important friends in the industry. Maybe you’ve heard whispers of a gorgeous home that the owners haven’t put on the market yet. With a hard money loan, you can convince buyers to sell to you because you have the ability to close more quickly than companies using traditional financing.

Ways To Use Hard Money Loans for Real Estate

There are many options for real estate financing. This type of loan is pretty flexible, so it adapts well to the primary focus of your business:

  • Commercial Real Estate Properties: Use a hard money loan to purchase commercial real estate, from stores to gyms. You can use this type of loan whether you’re planning on reselling the property right away, renting it out to Palm Beach businesses or waiting for the perfect market.
  • Residential Investment Properties: Purchase properties in Palm Beach to sell to interested parties, including families, couples and individuals. You can use a hard money loan for luxury apartments, houses, condos, ultra-luxury homes, waterfront properties, townhouses, duplexes, single-family homes and multifamily properties. In other words, the sky is the limit.
  • Fix-and-Flip Projects: A hard money loan can completely cover the needs of fix-and-flip financing. In fact, hard money financing was practically made for house flipping! The two go together perfectly: you get the capital needed to buy and improve properties easily, and you sell the house quickly, paying off the loan without issues.
  • Remodeling Costs: If you already own investment real estate or an owner-occupied commercial property, you can use this property to get a hard money loan for remodeling. This is helpful for medical practices to expand their building and equipment. Restaurants, bistros, stores, movie theaters and other businesses can use the funds to give their property modern accents and incredible design flair.

FAQs About Hard Money Loans

It’s normal to want to know exactly what you can expect when you sign up for a hard money loan. The best lenders are happy to answer your questions. There’s nothing “shady” about this type of lending. Choose a hard money lender that tells you upfront about any costs or fees you can expect.

What Credit Score Do You Need for a Hard Money Loan in Palm Beach?

Honestly, your credit score isn’t important for approval. Qualifying depends more on the property than your finances. That said, if you do have good personal or business credit, you can qualify for a lower interest rate.

What Are the Terms of Hard Money Loans?

Generally speaking, you can get terms of between 6 and 12 months. It’s a good idea to choose the terms that fit your project the best. If you know you’re going to sell the property quickly, shorter terms can save you money on interest.

How Much Is the Interest Rate for Hard Money Loans in Florida?

Interest rates are always changing for all types of financing. Hard money loans often carry rates between 8% and 12%, but this can change depending on the US and local market. You can expect a higher interest rate with short-term financing than with long-term financing. In exchange, you get funds more quickly and easily.

What Other Fees Do Hard Money Loans Carry?

Every hard money lender structures fees differently. Some charge origination fees, costs for property appraisal and paperwork processing. You will probably have to pay for insurance as well. Never hesitate to ask pointed questions about fees and costs, including how interest is calculated and when payments are due.

This also applies to penalties. Ask what penalties exist if you miss a payment. Find out whether prepayment penalties apply if you want to transfer the balance ahead of time. You want a lender that explains everything clearly.

The Best Ways To Use Hard Money Loans

It’s important to understand that hard money loans are designed as short-term financing. They’re different from long-term loans such as mortgages and SBA loans. They can be amazing for generating profits for your business, but you have to use them wisely to get the maximum benefit. How do they work best?

Basically, you should use a hard money loan for the initial purchase process. Where they really shine is in closing quickly on properties. This type of financing also fills a need when it comes to things that other lenders won’t touch, such as costs for remodeling or house flipping. Traditional lenders don’t want to deal with the risk of homes that need a lot of work before they go on the market. A hard money loan is the ideal solution for that.

Your goal should be to pay off the hard money loan as quickly as possible. This reduces the total amount of interest you pay and maximizes your profits. Doing this isn’t too difficult for experienced real estate businesses because you can just use the profits from your last sale to pay off the hard money loan for your current property. This keeps your business running smoothly.

Another option is to transfer the balance from a short-term hard money loan to a long-term SBA loan or conventional mortgage. This is a popular solution for getting around the approval and waiting time associated with mortgages. You take out a hard money loan to close quickly on your chosen property while you wait for the mortgage to go through. Once that’s available, you pay off the hard money loan balance and take your time paying back the long-term, low-interest loan at your leisure.

The Advantages of Hard Money Loans in Palm Beach, FL

It’s no secret that Palm Beach is a real estate investor’s dream. The market is ripe for profits — if you have the capital to take advantage of it. Hard money loans give you capital much more quickly than traditional bank financing: a couple of weeks instead of 3–5 months. You can get funds for nearly any type of property in any condition, turning smart remodeling choices into major profits for your house flipping business. As long as you know what you’re doing, hard money loans are an incredible tool for making money.

Learn more about hard money loans in Palm Beach, FL by contact the team at HML Solutions.

Diving into Interest Rates on Commercial Property Bridge Loans

Bridge loans in Florida are a type of short-term financing that provides investors, companies and individuals with the money they need quickly and without having to go through the typically stringent loan preapproval process. Unlike traditional mortgage loans, which are secured by one’s creditworthiness, bridge loans are almost always backed by the borrower’s real estate or an asset with similar value. Given this information, it’s safe to say that bridge loans involve considerable risk for both the lender and the borrower. For this reason, bridge loans come with higher interest rates than your standard mortgage or personal loans. For your convenience, our team at Hard Money Loan Solutions has put together a brief guide to bridge loans and their rates.

What Is the Average Bridge Loan Rate?

The average rate on a Florida bridge loan is between 8.5% and 10.5%. This is considerably higher than rates on conventional financing, which usually boasts rates as low as 1.176% and up to about 12%. With these rates, you may wonder why investors would choose to use a bridge loan over other conventional forms of financing.

Why Use a Bridge Loan

There are several reasons so many Florida investors and companies choose to use bridge loans over conventional financing. For one, the timeframe from application to closing is substantially shorter than that associated with traditional financing. The main factor private money lenders consider when assessing a bridge loan application is the equity of the property in question. If the property has sufficient equity, there is a high likelihood of approval. Upon approval, it may issue funds within three to five days.

Then there is the fact that bridge loans have far more lenient credit requirements than conventional loans. Though your credit score comes into play when determining your rates and approval amount, it usually won’t factor into your eligibility.

Finally, you can still qualify for a bridge loan even if you already have a mortgage. For this reason, you may choose to use a bridge loan to buy your new home before your current home sells. All these benefits offset the high interest rates for many applicants.

The Down Payment Requirement for a Bridge Loan

Because of the considerable risk involved in issuing bridge loans, lenders like to ask for sizeable down payments of 20% or more. If you do not put down at least 20%, your other mortgage payment may increase.

The Types of Bridge Loans Available

Bridge loans typically fall into one of two categories. Those are as follows:

  • Mortgage Consolidation: In a mortgage consolidation setup, you would consolidate both your mortgages into a loan that amounts to 80% of the value of your property. You would then pay off what remains of your first mortgage.
  • Hold Two Loans: In this option, you would borrow up to 80% of your property’s value, less the existing loan balance. You would then use the money from this second mortgage as a down payment for the additional property. Your first mortgage would remain until you sell it and have the funds to pay it off.

How Much Can You Borrow Through a Bridge Loan?

Generally, it is entirely up to the lender to determine how much it can or wants to lend you. However, most lenders in this market typically grant up to 80% of the home’s value. To learn more about bridge loans and if they’re right for you, talk to a private lender today.

Understanding the Ins and Outs of Bridge Loans in Florida

Now is a great time to purchase the home of your dreams. Low interest rates make it easier to buy a piece of real estate that has many of the items from your wish list, such as property renovations, new construction, and a wide range of both commercial and residential projects. Florida bridge loans can be a huge help in closing quickly on attractive properties. At HML Solutions, we provide bridge financing with excellent terms and flexible options.

Why Use Bridge Loans When Purchasing a House?

Many homeowners want to sell their existing home first and use that money to pay for the new house. At the very least, the money you make from a house sale can help you cover the cost of the down payment. It also gives you a bigger budget when you’re shopping for properties.

There’s just one problem with the plan of selling your house before buying a new one: It can take longer than you think to make the sale. What if it takes a while for the buyer to fill out the paperwork?

Another situation happens when you’re applying for a conventional mortgage. Taking out a mortgage is a great idea because the interest rates are fantastic. That said, getting approved and receiving funding can take a while: often from several weeks to months.

This is a problem if the property you’re interested in is in demand. You really don’t want to allow time for a bidding war to happen. You definitely don’t want someone else to swoop in and buy the home before you get a chance. The solution is bridge financing.

How Do Bridge Loans Work?

What exactly is a bridge loan? It’s a type of short-term financing that is designed to cover your needs while you’re waiting for other funds to appear. For example, you can take out a bridge loan to close on your dream property while you’re waiting for your own home to sell. Bridge loans can help you buy a hot property right away, before other interested parties can get their hands on it.

What Is the Best Way To Use a Bridge Loan?

From the very beginning of your property search, you should get prequalified for a bridge loan. It’s relatively to qualify even if you don’t have perfect credit. What comes next?

  • Arrange for long-term financing: Once you’ve found a home you want to buy, it’s time to put your existing home on the market or apply for a long-term bank loan. Both of those options are going to take a while, so it’s good to get started ASAP.
  • Finalize your bridge loan and buy the property: You get money to cover the closing costs for the home purchase. Congratulations, you’ve purchased your dream home!
  • Transfer the loan balance: Finally, once your long-term loan is approved or your original house sells, you use that capital to pay off the balance of the bridge loan. With no prepayment penalties, transferring the balance is a breeze.

Using a bridge loan this way combines the flexibility and speed of short-term financing with the low interest rates and long repayment terms of traditional loans. Get the financing you need by contact HML Solutions today.

Using Hard Money Loans for Residential Property Investments in West Palm Beach, FL

The real estate market in Florida is booming and nowhere more so than in the West Palm Beach area. Those looking to become involved in residential property investment in this fast-growing area need a form of financing that can move at the same whirlwind pace as the market itself. At HMLS we offer hard money loans for residential properties that may be the solution you are looking for.

How Do Hard Money Loans Work?

Unlike traditional loans, a hard money loan is approved based on the value of the property you intend to purchase rather than on your own credit history. This can be essential for property investors and flippers who typically need to carry a debt to income ratio that can be concerning to traditional lenders who do not have a detailed understanding of the real estate industry. At HMLS we have extensive experience in real estate lending and a deep understanding of how your industry works. 

Since the property itself is so important in this kind of loan, you will need to provide multiple forms of assessments in order to determine the correct value of the property. You should look into market assessments for the West Palm Beach area, obtain a professional property assessment from at least one reputable source and consider getting a broker’s assessment as well. The quicker we are able to determine your property’s value, the quicker we can move you through the application and approval process.

Who Can Benefit From a Hard Money Loan?

The lengthy process of applying for a traditional mortgage and the ability to fulfill the requirements to be approved can be an obstacle for some investors. A hard money loan can be a convenient solution for reasons such as these:

  • You need to secure financing quickly to compete with other investors.
  • Your debt to income ratio doesn’t qualify you for a traditional loan.
  • You want to secure a loan with the value of the property rather than your own credit score
  • You only need a short-term loan until you are able to flip the property in question.

What Are the Terms of Typical Hard Money Loan?

Through our hard money loan program, you will benefit from terms such as these:

  • Loan amounts as high as  70% of your loan to value ratio
  • Repayment terms that range from 6 to 24 months
  • Industry competitive interest rates
  • Loans close in a matter of days

Reach Out To Us Today

At HML Solutions we specialize in hard money financing for both commercial and residential real estate professionals. Our extensive experience gives us a unique understanding of the real estate investment industry and your unique financial needs. Contact one of our highly trained agents today to schedule a consultation. We can help you determine if a hard money loan is right for you and get you started on our fast and efficient application process. Once approved, you could have the essential financing you need in a matter of days, allowing you to move forward on your next project. Contact HML Solutions today to get started.