The question is: how quickly can you get a hard money loan? The answer is – very quickly if you know what you need to give the lender when you apply for it.

What Is a Hard Money Loan?

Before discussing the time frame, it is important to understand exactly what is a “hard money loan”.  Hard money loans, sometimes called ”bridge loans” or “private money loans,” are loans where the lender uses private money to fund the loan as opposed to getting a loan from a traditional lender such as a bank or life insurance company.  

Private money lenders are now making an increasing share of commercial real estate loans. The reason for this is that a lender using private money has a great deal more flexibility to structure the loan in a way that benefits the borrower whereas banks are heavily regulated by the federal government and can’t offer the flexibility that borrowers require. 

The other reason borrowers are taking hard money loans is that these lenders can close extremely quickly. A quick close can allow the borrower to find and close good deals whereas having to wait for a month or more for a bank loan may cause an investor to miss out on an advantageous purchase.

How Long It Takes to Get a Hard Money Loan vs. Traditional Loan

At Montegra we have closed some loans in as quickly as 5 days when the borrower has appropriate documentation.  We never take more than 30 days from start to finish to underwrite and close a loan. The average time for us to close is between two to three weeks if we need to get more of  the required documentation.  

Documentation Need For Quick Hard Money Loan Close 

The first item that will help you close quickly is a complete loan application.  This should include all relevant information on your loan request:  

• What is the amount of loan you are requesting?    
• Is this a purchase money loan or a refinance?  
• Is there a specific date this loan must close by? 
• What is the collateral for the loan?  
• What is your estimate of the current fair market value for the collateral?  How did you arrive at this value estimate?  
• Who holds title to the property now?  
• What entity will take title if this is a purchase?  
• Who will provide a personal guarantee?  It helps if you can provide a current personal financial statement of the proposed guarantor.  
• Is there an existing ALTA survey of the collateral? Is there a title commitment for it?  
• Is there an appraisal or BOV for the property?  

If you are requesting a hard money loan for a purchase, you will need to provide a copy of the PSA.  The more of these items you can give the lender when you apply the shorter the time it will take to close your loan.  

Traditional Loan Close Times 

When time is important, hard money loans offer the best solution for savvy commercial real estate investors. A direct hard money lender (i.e. a lender that uses their own funds like Montegra) can close a loan in as little as 1 week. A traditional lender like a bank typically takes at least 1 month to close a loan. A seller is often motivated to offer a lower price in return for a quick close.

In addition to the items above, banks typically require a copy of your bank statements and a credit report. They will have to “verify” your income so they need copies of your personal and business tax returns.  These items then need to go from your loan officer to the department head and then to the loan committee. No wonder it can take so long to get a bank loan.

Get A Fast Hard Money Loan With An Experienced Colorado Lender

If you pick an experienced hard money lender (Montegra has been making these loans for 53 consecutive years) the lender can arrange for extremely fast appraisals. Once the value of the collateral is determined it only takes us a few days to draft loan documents and arrange for the loan closing.  Because you are dealing with the decision maker from the beginning there is no delay while the loan request moves up the chain of command. Sellers get frustrated when their buyer keeps asking for more and more time to get to the closing table. If the buyer can assure the seller of a quick close the seller is motivated to work with that buyer instead of someone who has a long loan contingency built into their offer.

Closing in a week instead of a month or longer can make the difference between being able to purchase a property at an advantageous price and losing a deal to another buyer who can close more quickly with fewer contingencies than you.

Contact us today or apply online to get started.