Interesting Building

HARD MONEY LOANS

Hard Money Loans VS. Soft Money Loans

Soft Money is an innovative new approach to private money lending which combines the benefits of both hard money loans and more traditional loans. A soft money loan combines the benefits of a hard money loan with the greater security that a traditional loan offers.

A soft money loan requires more underwriting than a hard money loan, allowing it to have lower rates than a hard money loan and greater security. It is based on both the borrower’s high credit score and the property’s LTV, and is always a term loan rather than a bridge loan.

While a soft money loan requires more underwriting, it also offers less risk, making it a deeply attractive option to borrowers who find the concept but not the details of a hard money loan appealing.

 

In the context of lending, the term ‘soft money’ implies that this type of loan falls somewhere between a hard money loan and a traditional mortgage. 

What is a Hard Money Loan?

A Hard Money Loan is an asset based loan program used by private money lenders on investment properties for borrowers.  They are considered an asset-based bridge loan and require little underwriting, making them a quick loan for borrowers to get approved, are generally bridge loans, and are not based on a borrower’s credit score.

 

This makes them a high-risk loan that is used for real estate investment. There are less restrictions on this type of mortgage loan versus other traditional loans, where the investor would have to present income verification during the approval process. When applying for a Hard Money Loan the borrower will have to go through full underwriting, however there is no minimum FICO score required and the borrower will not have to worry about bankruptcies, foreclosures, collections, etc. 

Hard Money Mortgage Program Overview

  • Rates Starting at 7.25%

  • $100K – $5M

  • Up to 75% LTV

  • Blanket Loan Options Available

  • Single-Family, Condos, Townhomes, Multi-Family, Commercial, Mixed Use, Office, Retail, Industrial, Warehouse

  • Fixed rates/Adjustable

  • 9-24 Month Terms

  • Interest Only Payments

  • Purchase, Refinance, or Cash Out

  • Foreign Nationals Eligible

  • No Prepayment Penalty Option Available

What is the difference between a Soft Money Loan and a Hard Money Loan?

A soft money loan requires more underwriting than a hard money loan, allowing it to have lower rates and greater security. It is based on both the borrower’s credit score and the property’s LTV, and is usually a term loan rather than a bridge loan. The combination of lower rates, higher LTVs, and a longer time frame makes the soft money loan a better fit than a hard money loan for many borrower’s situations, particularly those interested in purchasing a commercial property or a long-term investment property.

Are You First Time Real Estate Investor?

You're in the right place! Stratton Equities helped thousands of first time real estate investors and experienced borrowers on their investment properties.

Our team of loan officers will walk real estate beginners through the entire loan process to  ensure you're well informed about soft money lending.

As a soft money lender and private money lender, we are fully equipped to help you with all real estate investing goals.