Frequently Asked Questions

What is hard money?

Hard money, also referred to as private money or equity lending, is typically used as short-term bridge financing for real estate transactions. It is generally a short to medium term solution ranging from 6 months up to 6 years. This will vary by lender. Hard money is used for many types of transactions and always secured by real estate. This may include land, commercial and residential real estate and development projects. For a list of MB4I’s lending criteria, click here.

How much money will you lend?

Every lender will have their own loan criteria including a specific loan-to-value ratio or LTV. At MB4I, we lend up to 75% of the property purchase price. We require borrowers to make a 0% to 20% down payment.

What are the typical interest rates?

Private money rates generally range from 14% to 24%. The rate is determined by looking at a combination of factors including the type of property, the loan-to-value (LTV) ratio, the investment track record of the borrower, the condition/desirability of the property, and the actual cash-in or real equity contributed by borrower.

What fees are involved?

We typically charge 1 to 5 points based on the loan amount. We also charge a minimum doc prep fee of $250. This fee can increase based on special circumstances such as the size of the loan and a borrower requesting funding faster than our normal 72 hours. There are no hidden fees or junk fees. MB4I borrowers are also required to pay for title insurance and provide proof of hazard insurance. Click here for our Loan Request Form detailing all required documents and fees.

Can the fees be paid from the proceeds of the loan?

Usually not. In instances where there is significant equity in the project we might make an exception.

Is there a pre-payment penalty?

There is no prepayment penalty. However, we do have a minimum loan fee of $500.

Why do real estate investors pay such high interest rates for hard money loans?

The short answer is convenience and speed. Real estate investors who borrow hard money often have a competitive advantage in the market because they can get quick funding. We typically fund deals within 72 hours. There are many other reasons why a borrower would choose to use hard money such as the convenient access to virtually unlimited funding. Real estate investors are not constrained by the traditional lender requirements for credit reports and verification of employment or income. Fast funding is a very significant factor in completing a profitable transaction for most borrowers who make a living investing in real estate.

What is the most common use for private money?

Our loans are typically for residential investment properties. MB4I currently does not make direct loans for raw land or commercial projects. However, if you have a deal that you are working on, let us evaluate it with you by calling our office. If we can’t help you, chances are we can help you find a lender that will.

How fast can you fund a deal?

Our typical turnaround is 72 hours. This is assuming we have received all required documentation including Purchase and Sale Agreement, a minimum of six comps, preliminary title report, and proof of hazard insurance along with the completed Loan Request Form. Click here for our Loan Request Form.

Is an appraisal required?

Typically we do not require an appraisal. However if you have one we would like to review it along with a minimum of six comps. Evidence of value is a critical part of the hard money loan process.

If I am a mortgage broker bringing you a transaction, how do I get paid?

You bring us a borrower and we price the loan to you. You price the loan to your client, adding your fees as appropriate. You stay involved in the loan if you choose to do so. Prior to closing you will need to submit a fee demand to escrow and receive a check directly from the title company.

How do I start the loan process with MB4I?

We recommend that you start by discussing your investment project with us. Simply call and discuss the loan with us. You may also submit a summary by email or complete our Online Loan Request Form which will walk you through the process. If we like the project concept and feel that the numbers are acceptable, we proceed to the next step. The next step is completing the loan package detailed on the Loan Request Form. We then review the completed loan package and provide a loan commitment, with funding subject to final approval which is done in-house. If the property checks out, we draw up the documents and close the loan through escrow.