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Frequently Asked Questions

We’ve compiled a list of the questions we’re asked most often about hard money lending and our lending process.
Have more questions? We have answers! Get in touch any time.

Hard Money Lending

What is a hard money loan?

“Hard money” is the term used for loans funded by private parties that cannot be funded by conventional lending institutions. There are many types of hard money loans. Other common industry terms used synonymously with “hard money loans” include: private loans, asset-based loans, bridge loans, rehab loans, and interim loans. Generally, Streamline Funding focuses on providing profitable lending solutions to real estate investors who purchase residential investment properties at substantial discounts and/or properties with large value-add or upside opportunity.

Do legitimate businesses use hard money loans?

Absolutely! Many types of investors utilize hard money loans–from first-time investors starting their first fix-and-flip project, to enterprise-level home builders and developers who require quicker funding than traditional lenders (i.e. banks) will offer.

Why do hard money lenders exist?

Real estate investors, even seasoned ones, often need quick funding to secure a deal they have in the crosshairs. Though banks and other institutional lenders may offer the lowest interest rates, they can’t provide the speed or flexibility necessary to make some deals happen fast enough. Plenty of investors–both first-timers and hundredth-timers–opt for a hard-money loan when their situation demands speed.

When does it make sense to use a hard money loan?

Even investors with years of experience, strong financial statements, and access to traditional financing often opt for a hard money instead of a traditional loan when:

a) They need to close quickly, and their bank can’t meet their deadline.
b) They have an excellent investment opportunity but don’t have sufficient financial strength to get a bank loan.
c) They want more leverage than a bank is willing to give.

What are the advantages of a hard money loan?

a) Hard money loans require a much less complex application process in order for the lender to make a final loan decision.
b) There’s less scrutiny into the investor’s personal financial situation–including income, tax returns, assets and liquid reserves–compared to the scrutiny required to secure a bank loan.
c) Streamline Funding doesn’t require perfect credit and/or substantial amounts of disposable income from our clients. Instead, we focus on the merits of the specific deal under consideration.

What are the disadvantages of a hard money loan?

a) Hard money loans typically carry higher interest rates and origination fees than conventional bank loans.
b) The quality of active lenders varies substantially. In certain cases, a predatory lender may seek to write loans where the risk of default is considerably higher, simply in hopes of foreclosing on the underlying real estate. Streamline Funding is very different. We constantly seek the repeat business of our clients, and approve only those deals that we believe are financially feasible.

How do hard money lenders differ from one another?

Hard money lenders differ from one another in many ways, including their lending criteria. (i.e. Loan to Value or Loan to Cost ratios), the types of real estate on which they lend, their minimum and maximum loan sizes, and the geographic regions they service. If you want to compare a hard money lender to another from an “apples to apples” perspective, you might consider such variables as pricing (fees and interest rates), flexibility of terms, the lender’s reputation, and the quality of service.

Over 75% of the investors Streamline Funding has financed have returned to us for a second (or third, or fourth) loan. Our aim is to earn your trust, and to become your long-term real estate investment lender.

How do I get pre-qualified for a hard money loan?

Easy. You can get pre-qualified right here on our site, by submitting the form on our Apply page. The whole process takes only about five minutes, and once you’re done, a Streamline Funding loan officer will contact you within one business day.

Our Lending Process

Where do you lend?

Streamline Funding lends throughout the five major metropolitan areas in the state of Texas–specifically Austin, San Antonio, Houston, Dallas, and Fort Worth. We’ll also consider other secondary markets in the state on a case-by-case basis.

Can I live in the house I'm renovating during the course of the loan?

Sorry, no. Streamline Funding doesn’t lend on any owner-occupied investment properties. Our hard money lending program was created exclusively to finance non-owner-occupied properties.

What are your terms?

Streamline Funding currently has five different loan programs to help investors with a multitude of types of projects, ranging from fix-and-flips to long-term deals. For more details, read about our loan types here.

How does Streamline Funding decide how much to lend?

We make our lending decisions based heavily on each project’s Loan to Value (LTV) ratio. In addition to the LTV, we consider the Loan to Cost (LTC) ratio. These ratios measure the risk of the loan by comparing the loan amount to the cost of the project and the value of the asset, respectively.

Streamline Funding has incorporated an After Repair Value (ARV) approach to valuing our real estate projects as well. In many cases, we’re able to fund as much as 70% of the ARV of a property, assuming the other criteria are met.

Do you provide a letter of credit?

Of course! Once you’ve qualified for a loan with Streamline Funding, a Letter of Credit (or “Letter of Intent”) will be prepared for you. This letter isn’t a commitment to lend, nor is it a “Proof of Funds”; instead, it’s a letter that can be presented to a seller during the contract negotiation period, showing our intent to lend you an amount typically equal to or greater than the purchase price.

How long does it take to close a loan?

Our loans are typically close in no more than 7 to 10 days. This assumes that we have the investor’s cooperation in submitting a clean and transparent loan package. The speed of the transaction depends, of course, on the accuracy of the information you provide us, and your own response time. But we’re able to move as fast as you are.

What are you looking for when considering a loan application?

Streamline Funding always aims to ensure that your transaction is a positive one. First, if a deal is too “skinny” and looks like it may fail, we’ll typically pass on the opportunity. Secondly, we analyze the property’s expected ability to repay the debt. Finally, we look at the investor’s ability to service the debt, as well as his or her credentials (i.e., past experience) with projects similar to the one for which they’re applying.

What documents will you need from me?

On every deal, we require:

  • A loan application
  • A copy of the contract (for purchases) or HUD-1 (for refinances)
  • A bio or resume for the investor
  • Appraisal, survey, hazard, or builder’s risk insurance
  • A title commitment and entity documents

Are your rates and points flexible?

Our rates and points are fixed for the most part, but can vary slightly depending on the borrower and the specific project.

We closed our first loan together. Now what?

First of all, congrats! Pat yourself on the back–you’re a champ!

Once a loan has closed, your file will be transferred to our loan servicing division for the duration of the loan. Assuming your project has a construction component, you’ll work with our loan servicing division on your future construction draws. At the time of the transition, you’ll be greeted by a member of our loan servicing or construction control team; he or she will personally walk you through every step of the process, and offer you tips on how best to execute your project and keep in compliance with our processes.

Read Streamline Funding's Borrower Success Manual
HAVE ANOTHER QUESTION? WE’RE ALWAYS HERE TO HELP.

Connect with one of our loan specialists.

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