Worcester, MA · Member since 2017 · 18 posts · 8 votes
Hello BP team!
I've been exploring the idea of hard money loans and I believe they are right for some situations and some they may not.
One particular situation that I've come across - that I am in as well right now - is the market is hot and cash offers are being accepted first over conventional/FHA loans.
I'd like to get feedback for those that may be in this predicament. Question: If you have cash for 10% downpayment and are already preappoved for an FHA loan but cash offers are getting first priority, would a hard money loan solve this problem? If not, what other creative ways can you think of to match the attractiveness of a cash offer?
Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
6y
@Steven Caligaris. Question - if you submit a cash offer you have to provide proof of funds. How do you do that without the cash? Serious question because I have not figured that out yet.
Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
6y
@Steven Caligaris. Question - if you submit a cash offer you have to provide proof of funds. How do you do that without the cash? Serious question because I have not figured that out yet.
A HML is Still a financed purchase, plus HML's can't lend on owner occupied.
Great feedback- I suppose this takes out the possibility of a hard money loan as it will not be shown as a cash offer nor will it be able to be owner occupied.
Tinton Falls, NJ · Member since 2020 · 108 posts · 85 votes
6y
If you get pre-approved for a hard money loan, they sometimes will provide you with "proof of funds" letters. They aren't the same as having cash proof of funds, but usually the letters will mention they've already done a significant portion of their underwriting and can close quickly.
You could also try and structure your offer so that it puts more risk on you. For instance, you can put a larger deposit down, a quick closing period, and also waive a mortgage contingency. This obviously puts a lot of risk on your shoulders and you'd only want to do this if you are very confident you'll be able to perform, but it's one way to make your offer more attractive. You'd want to speak to your attorney about some of these options for real guidance though.