Refinancing an Inheritance Property with a Hard Money Loan

When you inherit a property after a loved one passes away, you become responsible for the mortgage. This can sometimes be problematic if you share the property with one or more co-heirs or do not have the funds to cover the monthly mortgage payment. If you need to refinance an inheritance property for any reason, securing a hard money loan from a reputable lender can help.

Why Might You Need To Refinance an Inheritance Property?

Mortgage loans have a due-on-sale clause that requires the loan to be paid in full before the property can be transferred to another owner. The only exception to this rule is inheritance property; federal regulations prevent lenders from invoking this clause when the property is inherited. 

If you are the co-heir of a property, you and the other beneficiaries must reach an agreement on what to do with the property and who is responsible for paying the mortgage. You must buy out the other co-heirs if you want to have full ownership of the inherited property. You may need a large sum of money up front to buy out any co-heirs, and a hard money loan is a quick financial solution that can be paid back quickly and has flexible terms.

Being the sole heir of an inheritance property makes transferring ownership of the property easier. You may assume the mortgage payments of your late loved one. If you cannot afford the monthly payments, refinancing the mortgage loan can help.

How Can You Refinance an Inheritance Property?

If you need to refinance a late loved one’s property, you must first determine whether you are the lone heir or a co-heir. This information can be found in the will of your late loved one. Use the following steps to refinance the mortgage and then use the money you receive to buy out any co-heirs if necessary:

  1. Add your name to the mortgage deed
  2. Compare refinancing rates with various lenders
  3. Get a home appraisal
  4. Secure a lower monthly mortgage

What Options Do You Have Besides Refinancing an Inheritance Property?

If you cannot reach an agreement for refinancing, you may choose to assume the current payment. You may also ask for a loan modification or rent or sell the property to cover costs.

How Can a Hard Money Loan Help You Refinance an Inheritance Property?

A hard money loan is a quick form of financing with flexible terms. You can secure the money you need quickly to cover a large mortgage payment or buy out co-heirs. Repayment periods are usually short, and hard money lenders are usually willing to work with borrowers who have less-than-perfect credit scores.

When you need to buy out co-heirs to gain full ownership of an inheritance property or need a large sum of money to afford a new mortgage payment if you are the sole heir of an inheritance property, a hard money loan may be the right financial solution for you. HML Solutions offers hard money loans with competitive terms, so if you are interested in securing this financial solution to refinance an inheritance property, contact us today to apply.

What To Know About Using Bridge Loans for Construction Projects

It has always been important to have sufficient financing for construction projects in Florida. Whether your business focuses primarily on residential construction and remodeling or commercial development, having access to significant financing can help you reach your deadlines on time.

What has changed in the last decade are the type of loans business owners, real estate businesses, contractors and fix-and-flip businesses choose. It’s becoming increasingly common for companies to use bridge loans for construction. Why are bridge loans popular for this purpose and what are the benefits?

Short-Term Financing for Construction Projects?

One reason why it may seem surprising to see bridge loans on the construction scene is that bridge financing is for short-term needs only. The higher interest rates of hard money loans and other asset-based financing means that you generally want to pay them off as quickly as possible. Usually, for a long residential or commercial development project, conventional mortgages or SBA loans are the options of choice.

Bridge financing started popping up as developers realize that traditional term loans are too rigid to be the only source of funding for construction. You can save money with the lower interest rates, but it’s hard to adapt to the unexpected situations that tend to appear at any construction site in Florida. That’s where the speed and flexibility of asset-based financing truly excel.

Situations When a Bridge Loan Can Save Your Construction Project

These days, the construction process isn’t as easy to plan as in the past. Countless problems or surprises can appear and leave contractors looking for capital. Here are some of the times when you’ll be glad to have bridge financing by your side.

Unexpected Issues With Land, Permits or Homes

Contractors and real estate developers do their best to perform due diligence before breaking ground, but that doesn’t stop unexpected issues from appearing. This situation is common with remodeling projects, fix-and-flip projects, and construction.

Sometimes, providing adequate drainage is more time- and resource-consuming than anticipated. Homes being remodeled may unexpectedly reveal mold problems that are costly to remove. City ordinances may change or permits may take longer than expected to acquire.

In all of these situations, it’s possible to quickly obtain a bridge loan to cover expenses and get the project back on track. The additional interest is a small price for meeting your work deadlines and getting paid.

Rising Materials Costs

Calculating the costs of construction materials is practically an art. These estimates are important for making sure your initial loan is sufficient to cover the full costs of materials during the project. Unfortunately, even the best-laid plans can change if the market increases the costs of certain items overnight. Everything from cement and timber to hardwood cabinets and appliances can shift rapidly based on global supply-chain issues.

Change In Construction Project Scale

The client is always right. That’s still true even if the client suddenly decides to increase the size, style or structural details of the project. How can your business adapt to these sudden changes? A bridge loan can help you cover the difference between the original budget and the new one.

This situation is very common with home building in Florida. New homeowners often have a desire to enjoy the house of their dreams. As the project advances, they may realize that certain layouts or details aren’t what they envisioned. With flexible financing, contractors can adapt to changes in the kitchen, living room, patio and other spaces.

It’s not just contractors that can benefit. Real estate developers should also have a source of financing that reacts to on-the-spot decisions. There are times when it becomes apparent that certain changes are for the good of the project, boosting property value and revenue significantly.

Budget Issues

Even experienced real estate businesses can have budget problems, but this situation is more common with new property investors and house-flippers. Until you have a few construction projects under your belt, it’s not easy to accurately predict how much you’ll need to complete a project. A common tip is to plan your budget, add 50% for unexpected costs and add another 50% to that for good measure.

The good news is that all isn’t lost if you accidentally blow through your construction budget halfway through the project. You can get a bridge loan to successfully bring the project to completion and reap the financial benefits.

Slow Projects

When a project is doable with your team, it’s easier to gauge work speed and delivery times. Things are more difficult with large-scale residential or commercial construction projects. These builds may require coordinating efforts with dozens of different subcontractors. You need to manage electrical, plumbing, HVAC and countless other specializations.

In this situation, it’s common for things to progress more slowly than expected. Sometimes, this is due to weather issues. Often, it’s the human factor. In any case, the longer the project takes, the higher the labor costs. Bridge loans give you a buffer to adapt to delays and hire additional personnel as needed for successful completion.

Heavy-Equipment Repairs

One of the most dreaded things that can happen on a construction worksite is equipment breaking down. If your team relies on that piece of heavy machinery to get the job done, suddenly everything comes grinding to a halt while repairs are scheduled. This can negatively affect any construction business, from small teams to huge companies that perform municipal work.

Bridge financing can help with this situation in several ways. First, you can use the funds to pay for repairs that are outside of your project budget. Second, the financing can also help you absorb the cost of renting replacement machinery in the meantime to keep your workers on the job. That way, other teams don’t fall behind because of the stoppage of a single area of the construction project.

Multiple Construction Projects

Large real estate developers, and even some medium-sized construction businesses, often have several projects going simultaneously. Doing this can help you maximize your profits, but it can also play havoc with your cash flow if you’re not careful.

Keeping your working capital available depends on a careful dance of customers paying and setting money aside wisely for the next project. House flippers face similar challenges related to how quickly the previous home sells.

Gap financing is an incredible tool for helping with cash flow for any business. It’s perfect for providing extra capital when you need it. As soon as you get paid or sell a home, you can use part of the proceeds to pay off the bridge loan.

The Benefits of Bridge Financing for Construction

How does construction financing with bridge loans stack up against traditional loans? There are numerous advantages as well as a few disadvantages. First, let’s go over the pros:

  • Fast financing: Construction businesses and fix-and-flip businesses can get approved for a bridge loan quickly. The average time for approval is a week, but sometimes it only takes a few days. In any case, you can get funds much more quickly than with a long-term loan. Even working capital loans from banks usually require several weeks to get approved.
  • Easy qualification: The loan application for bridge financing is a breeze compared to traditional loans. Forget about having to provide endless copies of balance sheets and business reports. You just need to show basic business documents and information related to the construction project.
  • Low credit score requirements: Unlike traditional mortgages, bridge loans don’t require exceptional credit for qualification. Small construction businesses and large developers can apply equally. Even past credit problems aren’t an obstacle; it’s possible for companies that went through bankruptcy in the past to qualify.
  • Amazing flexibility: One of the most popular features of gap financing is that it comes with no strings attached. No one tells you how you have to use the capital or when. There is no deposit schedule requiring the release of funds in small portions as the project advances. Instead, you get the full funding amount right away to use however you see fit.
  • Customizable loan terms: As experienced alternative lenders, we can offer terms that are much more flexible than traditional banks. You don’t have to deal with endless layers of red tape to get the working capital you need. We can customize the repayment terms of your loan so payments are comfortable for your business’s operations.

What about downsides? There’s a tradeoff with any type of financing, and bridge loans are no different. The incredible flexibility, speed and accessibility of gap financing mean that interest rates are higher to compensate for the increased risk for lenders.

For many real estate companies, this cost is well worth the benefits provided. You should analyze your project to weigh the pros and cons before making a decision.

Trustworthy Construction Project Financing in Florida

At HML Solutions, we have an excellent reputation with contractors, fix-and-flip companies, real estate developers, construction businesses and other companies. We provide great rates and terms that adapt to your project goals. Above all, our team is committed to helping your business at every step. We’re happy to answer your questions and help you select the right loan options for your current needs. Contact us right away to learn more.

How Bridge Loans Help 4 Industries in Florida

There are many different industries in Florida, but what they all have in common is a need for capital. Regardless of whether your company handles sales, manufacturing, construction or another area of business, you need funds to increase growth. Bridge loans are an amazing tool for increasing your company’s working capital on demand. This type of financing is popular with Florida companies of every size, from small businesses to large corporations.

What Are Bridge Loans?

Before we get into the specifics of what type of industries benefit most from bridge financing, it’s helpful to understand more about this type of funding option. Put simply, a bridge loan is a short-term loan designed to provide flexible working capital quickly. Sometimes, bridge financing is used to handle business emergencies, but most of the time it’s simply an everyday financial tool that companies use to manage their cash flow.

What Industries Benefit the Most From Bridge Loans?

Many companies like the freedom that gap loans provide. In Florida, bridge financing is especially helpful for four industries.

Manufacturing Businesses

Manufacturers have a front-loaded business model. They have to invest money at the beginning of a project to purchase a large number of raw materials for production, in addition to paying dozens or hundreds of employees.

These businesses don’t get paid until after the production process is finished, goods are shipped and invoices are paid. This timeline can last over a month from start to finish.

Gap financing can be an enormous help. With a bridge loan, manufacturers can get sufficient capital to pay for raw materials, cover payroll and take care of operating expenses. Once the client pays, a portion of the revenue can pay off the financing and the rest is profit.

Construction

Another industry that has an ebb-and-flow relationship with income is construction. From general contractors to electricians, virtually all construction businesses have to purchase materials at the start of a project, take care of necessary permits and pay a large team of employees and subcontractors.

Contractors usually don’t receive payment until the project is complete, which can put a squeeze on available capital, especially if unexpected problems such as mold appear. Fortunately, with bridge financing, construction businesses can keep operating smoothly no matter what.

Real Estate

Real estate businesses, house flippers and develops use bridge financing a little differently. Here, the objective is to get a large amount of capital quickly to close on the property. After that, it’s possible to transfer the short-term loan balance to a long-term loan, or sell the property and pay off the bridge loan with the proceeds.

Service Industries

Several companies fall into this category: landscapers, plumbers, janitorial companies, HVAC contractors, interior designers, automobile repair shops — even doctors. Many of these businesses have cash flow issues, especially small businesses. Bridge loans help stabilize your cash flow and provide money to keep running your company without problems.

How Can Bridge Loans From HML Solutions Help Your Business?

Get the financing you need quickly and easily. Make decisions that benefit your company without constantly having to check if you have sufficient funds available. Contact our team right away to learn more.

Why Real Estate Investors in South Florida Should Use Bridge Loans

The real estate market in South Florida is very active. A favorable confluence of a good economy, great weather, and people from other states moving to the region in droves have contributed to this trend. Real estate investments in South Florida are in vogue and quite lucrative at this time.

Here at HML Solutions, we want to partner with real estate investors. Although the opportunity for profits abounds, it may require a bit of up-front capital to obtain the investment properties that you have in mind. Not everyone has sufficient cash in the bank to purchase a good real estate investment. But, we don’t think that that should deter you.

We believe that bridge loans are one of the best financial vehicles for real estate investors. These are short-term loans, generally with terms of up to 3 years, that are particularly suited for the real estate market. These highly flexible loans are designed to provide quick funding, perfect for a busy real estate market in which properties can move quicker than jackrabbits.

In fact, one of the main benefits of bridge loans is their inherent flexibility. The most commonly are used to facilitate the quick closure of a property purchase. They can also be used for a host of other costs associated with real estate investments. 

We believe that quick-funding bridge loans are better than traditional loans for most real estate investment opportunities. The application process for traditional loans from a bank can take a lot of time and is usually quite intrusive. After the application is finalized, there is a waiting period for approval, after which you may be denied.

Contrast that with bridge loans that provide funding quickly and can be tailored to each investor’s specific purpose and situation. We believe that there really is no comparison.

Sell Then Buy: A Typical Real Estate Technique 

For many real estate transactions, an individual will sell a property that they already own, then use the proceeds to buy the desired investment property that they have in mind. The problem with this approach is that the property being sold may move too slowly to provide the funds to capture the new real estate. Many opportunities are lost because of this.

We believe that loans that “bridge” that typical funding gap make good sense for many real estate investment transactions. A bridge loan provides a clear solution for you to take advantage of these excellent opportunities that you would otherwise be forced to pass on. Our bridge loans offer fast approval and funding, so the seller won’t even know that you need financing to complete the deal. As far as they know, you are flush with cash.

Benefits of Bridge Loans

We believe that you will find a number of hard-to-beat benefits when you obtain a bridge loan from us. Many of these features can be customized to fit hand-in-glove with your personal investment and financial situation. These benefits include, but are not limited to:

  • Loan Structure Options. We offer both fixed-rate and variable-rate bridge loans to the real estate investment community. The best choice for you will be dictated by your personal situation. We can help guide you to the best option. 
  • Low Rates. The interest rates we charge on our bridge loans are highly competitive with other lenders. You can save money with us because of our attractive rate structures. 
  • Interest-Only Loans. We offer interest-only bridge loans. This may be particularly attractive, especially if you expect to pay off the loan in short order, perhaps when the sale of an existing property is expected in a few weeks or months. Interest-only loans do not carry a principal component in the periodic payment schedule, hence they can be much cheaper for the investor taking on the loan.
  • Asset-Based Loans. Our loan programs include asset-based collateralized bridge loans. This may be a preferable option if you have a number of producing properties in your investment portfolio or if your credit history is less than stellar. These types of loans are backed by the value of an existing property rather than by the investor’s ability to pay back the loan by other means.
  • Removal of Contingency. When a home sale contingency is embedded in a purchase contract, the deal may fall through if the buyer is unable to sell an already-owned property first. Our bridge loans can help circumvent the need for such a contingency.
  • Unencumbered Loan Payoff. We do not burden you with prepayment penalties of any sort. If you wish to retire your loan early, feel free to do so without any additional charge. Then, move on to assembling the next piece of your real estate portfolio.
  • Availability to Non-US Investors. We lend to foreign as well as American real estate investors. In particular for foreign investors,  many of whom may not have banking relationships in the United States or an easy way to verify their credentials, our bridge loans are an ideal funding solution. 

Additional Utility of Bridge Loans

Most bridge loans are used to buy properties. There are, however, additional reasons to obtain a bridge loan. Bridge loans could also be used for the following situations:

  • Securing a new tenant
  • Stabilizing the cash flow of the property, or
  • Resolving a short-term issue that affects a property

An example of a short-term, real-estate-related cost that can be addressed by obtaining a bridge loan is an environmental issue with a property that needs mitigation.

Avoid the Traditional Loan Hassle

As we mentioned, applying for and finally obtaining a traditional loan from a bank or credit union can be a burdensome and time-wasting process. A typical scenario, one which you will want to avoid, often follows a course like this:

The loan aspirant contacts a local bank with the desire to obtain a loan for a real estate purchase. He or she is given reams of paperwork to fill out, a credit check to wade through, and then told that the institution will get back to them. The length of time that you wait for a response can seem like an eternity if you are watching other investors attempting to secure the property that you have in mind. In more than a few cases, the institution may deny your application, and you are left high and dry without funding. To make matters worse, your prized property had been snapped up by another investor while you were waiting for approval.

Here at HML Solutions, we want to partner with you, not frustrate your investment goals. Our bridge loan application process is at the other end of the spectrum: it is easy to apply for and a loan decision is made quickly. We believe that the smart decision is to partner with us.

Exit-Strategy Considerations

We find that the clearer your idea on how you plan to pay off your bridge loan, the swifter your approval and funding will be. Our customers generally retire their bridge loans in one of three ways: Payment from the sale of an existing property, payment with funds from other sources, or refinancing with a conventional fixed-rate or cable-rate mortgage.

Be sure to think this through before applying for a loan from us. Depending upon your envisioned exit strategy, we can offer a tailor-made bridge loan that fits perfectly with your expected plan.

National Interest Rate Considerations

Interest rates have been quite low for some time now, making the cost of taking on a loan relatively low. Because of this, the here and now can be an excellent time to take advantage of our bridge loan program. There is no way to know when rates will rise, perhaps considerably. The rise of inflation in recent months does suggest, however, that rates may rise and make the cost of capital more expensive. Regardless of the overall rate environment, when you have your eye on a property, a bridge loan may be the best bet for your funding.

Aspects To Keep In Mind

We would be remiss if we didn’t touch on the following considerations. Bridge loans can be a near-perfect vehicle for many real estate investors because of their flexibility, quick funding, and easy application process. Keep in mind, though, that bridge loans may carry higher interest rates than other types of loans. We believe that this will not deter too many investors, because these loans are generally paid back quickly and the total interest cost can be relatively small. Also, if an investor has other loans or debts, the adding of an additional loan needs to be thought through carefully. 

Closing Summary

Bridge loans can be the ideal solution for short-term funding gaps that commonly arise when real estate investments are under consideration. Here at HML Solutions, we strive to help investors overcome any funding shortfalls that they encounter. If you are looking to purchase residential, industrial, commercial, or land assets, we are here to help. Our bridge loan program provides highly flexible funding with speedy approval and quick arrival of capital.  Don’t let a shortfall of cash thwart your plans. Give us a call today and keep your investment program on a firm footing.