Hard Money Lenders El Paso: Quick Financing Tips

Published on July 29th, 2024
10 min read

Joseph Gordon Editor
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Joseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.

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When you’re looking to make a quick move in El Paso’s real estate market, traditional loans might not always be the best fit. Whether you’re eyeing a fix-and-flip project in Sunset Heights or trying to secure a commercial property in downtown El Paso, a hard money loan can be a valuable resource. These loans provide faster access to funds compared to conventional financing, making them a popular choice for real estate investors.

However, understanding the nuances of hard money lending is important to making an informed decision. In this guide, we’ll break down the essentials of hard money loans, how they work in El Paso, their common uses, and potential costs. We’ll also explore alternatives and highlight top local lenders to help you decide if this financing option aligns with your investment goals.

Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.

What is a hard money lender?

A hard money lender is a private investor or company that offers loans based on the value of a property rather than the borrower’s creditworthiness. These lenders typically work with house flippers, real estate investors, and individuals who need quick financing. The loan amount is determined by the after-repair value (ARV) of the property, which is an estimate of the property’s value after renovations.

Hard money loans have higher interest rates and fees than traditional loans. Borrowers can expect rates to range from 8% to 15%, with additional origination fees and closing costs. If a borrower fails to repay the loan, the lender can seize the property, making it a high-risk option that requires careful consideration.

How does a hard money loan work?

Hard money loans offer a flexible and quick financing solution. Here’s how they work:

Short-term loan: Typically lasts 1 to 3 years, providing a quick turnaround for investment projects.
Faster funding option: Loans can be approved and funded within days, much quicker than the 30 to 50 days it takes for traditional loans.
Less focus on creditworthiness: Approval is based more on the property’s value than the borrower’s credit score.
More focus on property value: Lenders assess the loan-to-value ratio to determine loan amounts.
Not traditional lenders: Loans are provided by private investors or companies, not banks or credit unions.
Loan denial option: If the property doesn’t meet the lender’s criteria, the loan can be denied.
Higher interest rates: Rates can range from 8% to 15% due to the increased risk for lenders.
Might require larger down payments: Down payments can range from 20% to 30% of the property’s value.
More flexibility: Terms can be more flexible, tailored to the specific project or borrower’s needs.
Potential for interest-only payments: Some loans allow for interest-only payments during the loan term, with the principal due at the end.

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What are hard money loans used for?

Hard money loans are versatile and can be used in various scenarios. Here’s a look at some common uses:

Flipping a house: These loans provide quick funds to purchase and renovate properties, making them ideal for flipping homes and selling them for a profit.
Buying an investment rental property: Investors can use these loans to acquire rental properties quickly, taking advantage of lucrative opportunities in the rental market.
Purchasing commercial real estate: For those looking to invest in commercial properties, hard money loans offer a fast and flexible financing option.
Borrowers who can’t qualify for traditional loans: Individuals with poor credit or unconventional income sources can still secure financing through hard money loans.
Homeowners facing foreclosure: Hard money loans can provide the necessary funds to avoid foreclosure and stabilize their financial situation.

How much do hard money loans cost?

Hard money loans generally cost more than traditional loans due to the higher risk for lenders and the convenience of quick, flexible funding. Typical costs include:

Interest rates: 8% to 15% or higher, based on risk assessment.
Origination fees: 1% to 5% of the loan amount.
Closing costs: Legal, appraisal, and administrative fees.
Points: A percentage of the loan amount charged upfront.

Online calculators can help estimate these costs.

Alternatives to working with hard money lenders

If you’re looking for other ways to leverage your current home’s equity, here are a few options to consider:

Take out a second mortgage: A home equity loan or home equity line of credit (HELOC) can provide funds at a lower interest rate.
Cash-out refinance: Refinance an existing property, pulling out cash to finance your new investment. It often comes with lower interest rates than hard money loans.
Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower or no interest rates.
Use a government-backed loan program: Programs offered by the FHA, VA, or USDA can assist in purchasing homes with lower down payments and reduced interest rates.
Peer-to-peer loan: Provided by individual investors through lending platforms, functioning similarly to hard money loans but often with different terms.
Specialized loan programs: Consider loans for fixer-uppers or investment property refinancing if you already have a hard money loan and seek to replace it.
Request a seller financing option: In some cases, sellers may agree to finance the purchase themselves, resulting in lower closing costs and less stringent eligibility requirements.

How to buy before you sell

HomeLight’s Buy Before You Sell program offers a seamless solution for those looking to buy a new home before selling your current one. With this program, HomeLight provides you with the necessary funds to purchase your new home, eliminating the need to wait for your current property to sell. This approach allows you to move quickly in competitive markets like El Paso.

The benefits of this program include reduced stress, avoiding the need for temporary housing, and the ability to make a stronger offer on your new home. The cost is competitive, with interest rates ranging from 9.5% to 12%, making it a viable alternative to traditional bridge loans. This program ensures you can secure your dream home without the typical delays and uncertainties of selling first.

Here’s how HomeLight Buy Before You Sell works:

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3 top hard money lenders in El Paso

Traditional lenders might not be the solution for every real estate investment. If you’re looking to move quickly and capitalize on an opportunity, explore the hard money lending options available in El Paso.

Marquis Mortgage LLC

Marquis Mortgage LLC, based in Texas, offers hard money loans for residential and commercial properties, specializing in El Paso, Austin, Dallas, Houston, and San Antonio. Founded by Sabin Marquez, the company can fund transactions in as little as three days. They provide competitive rates, no hidden fees, and flexible loan structures to meet various funding needs.

Lending clientele: Real estate investors

Loan criteria: Up to 70% LTV

Marquis Mortgage LLC has earned a 5.0-star rating on Google. Clients praise the company for their professionalism, efficiency, and knowledgeable service.

marquishardmoney.com

915-920-7223

Corridor Funding

Corridor Funding, founded in 2016 and based in Spring Branch, Texas, offers short-term, value-add loans for real estate investors. They operate in all major MSAs of Texas, and seven other states. Loan products include fix-and-flip, new construction (1-4 units), and 30-year fixed rate rental loans. Corridor Funding advertises fast funding approvals and up to 75% LTV on rental properties.

Lending clientele: Residential and commercial real estate investors, LLCs, and corporations

Loan criteria: Up to 75% LTV on rental properties; up to 85% loan-to-cost (LTC) on flips

Corridor Funding boasts a Google rating of 4.9 stars based on over 130 reviews. Customers praise their professionalism, responsiveness, and personalized service. “Wyaat at Corridor Funding was fantastic!” reads a recent review.

corridorfunding.com

210-941-3916

Wildcat Lending

With a corporate office in Plano, Texas, Wildcat Lending offers hard money loans for real estate investors. They provide fix-and-flip loans, rental property loans, and Wildcat Zero loans, in which the company covers the origination fees and requires 16% interest-only payments. They operate in 22 states, including Texas, and can close loans in less than a week, sometimes within hours.

Lending clientele: Residential real estate investors (properties with 1-4 units)

Loan criteria: Up to 80% LTV purchase or 75% LTV cash-out refinance

Wildcat Lending has been in business for nine years and touts a 4.8-star rating on Google based on over 150 reviews. Customers routinely praise their speed, expertise, and responsiveness.

wildcatlending.com

972-525-4777

Should I partner with a hard money lender in El Paso?

Whether a hard money loan is right depends on your needs and circumstances. These loans are best suited for real estate investors who need quick access to funds and have a clear exit strategy. They can be an excellent tool for flipping homes, purchasing rental properties, or securing commercial real estate.

However, if you’re a homeowner looking to leverage your equity, consider HomeLight’s Buy Before You Sell program as an alternative. This program offers a streamlined process, competitive rates, and the convenience of buying your new home without the stress of selling your current one first. Whether you choose a hard money loan or an alternative, making an informed decision is key to achieving your real estate goals in El Paso.

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