If you’re buying real estate as an investment, or planning to flip a house, you often need financing lined up before someone else gets the property. That’s hard to do with a traditional lender. A bank will review your income, debts and credit history before approving a conventional loan, and it takes time.
A hard money loan is based primarily on the asset, so it can usually be arranged sooner. In exchange, hard money loans have shorter repayment periods and higher interest rates than conventional loans.
Hard money lenders ask for less paperwork than banks do. They still ask for some. Here’s what you should expect to provide. You’ll find more detail in our hard money loan FAQs.
Documents required for a hard money loan
A purchase contract
If you’re borrowing to buy a property, the lender will want to see the signed contract. It should identify the property and state the sale price and the expected closing date.
Details of any existing mortgage
If you’re using a property you already own as collateral and it has a mortgage, you’ll need to provide the loan documents. These show the payment terms, the interest rate and the balance owed.
Proof of insurance
Before the loan funds, you’ll have to show that the property is insured. This protects the lender, and you, if the property is damaged.
Title insurance
You’ll need to buy title insurance. It protects you and the lender if someone else later claims an ownership interest in the property. If that happens, the title insurance company deals with it.
Your renovation plan and budget
If you intend to renovate and sell, provide your renovation budget and the price you expect the property to sell for afterward. You may also be asked to show that you have funds available for the renovation.
Tips for a faster approval
- Gather these documents before you apply
- Be realistic about your budget and your resale price
- Be ready to explain your exit: a sale or a refinance
- Tell the lender about similar projects you’ve completed
The more complete your file, the sooner a lender can give you an answer.
Apply for a hard money loan
Sachem Lending reviews each request and provides a term sheet for projects that qualify. Most of our loans close in 30 to 45 days, and sometimes sooner when everything is in order. See how it works on our application process page, contact us with questions, or submit an application.
