Hard Money Lenders in Michigan: Quick Financing Options
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Kelsey Morrison Former HomeLight EditorClose
Kelsey Morrison Former HomeLight EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers. She has seven years of editorial experience in the real estate and lifestyle spaces. She previously worked as a commerce editor for World of Good Brands (eHow.com and Cuteness.com) and as an associate editor for Livabl.com. Kelsey holds a bachelor’s degree in Journalism from Concordia University in Montreal, Quebec, and lives in a small mountain town in Southern California.
Are you searching for a way to finance your next real estate project in Michigan? Whether you’re looking to flip a bungalow in Ann Arbor or scoop up a rental property in Detroit, hard money loans can offer the quick and flexible funding solution you need. Hard money lenders in Michigan focus on the value of the property rather than your credit score, making them an attractive option for those with tight timelines or less-than-perfect credit.
In this guide, we’ll walk you through the essentials of hard money lending in Michigan, exploring how these loans work, their typical uses, and the costs involved. We’ll also share alternative financing options and highlight top-rated hard money lenders in the state. Whether you’re a seasoned investor or a homeowner looking for bridge financing, understanding your options will help you make informed decisions about your financial future.
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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 individual or company that provides short-term, asset-based loans secured by real estate. Unlike traditional lenders who emphasize the borrower’s credit score and financial history, hard money lenders in Michigan focus on the property’s value. Their clients often include house flippers and those purchasing rental properties who require quick access to funds and flexible terms.
Hard money lenders use the after-repair value (ARV) — the estimated value of a property after all renovations are completed — to determine loan amounts. Typically, they lend a percentage of the ARV to mitigate risk and maximize investment potential.
Hard money loans come with higher interest rates, usually ranging from 8% to 15%, and have shorter repayment periods, typically 6 to 24 months. Additional costs include origination fees, closing costs, and points. Non-payment of a hard money loan can result in the lender exercising their right to seize the collateral property according to the loan agreement.
How does a hard money loan work?
If you’re a real estate investor in Michigan looking for quick and flexible financing, connecting with hard money lenders could be a viable option. Here’s a breakdown of how hard money loans work:
- Short-term loan: These loans usually need to be repaid within 6–24 months, unlike the longer terms of traditional mortgages. Some lenders may be willing to extend the term up to 36 months for good borrowers.
- Faster funding option: Hard money loans can be approved and funded in a matter of days, much quicker than the typical 30 to 50 days for a conventional mortgage.
- Less focus on creditworthiness: Approval is based more on the value of the property than on your credit score or income history.
- More focus on property value: These loans use the property as collateral, focusing on its loan-to-value ratio rather than your financial situation.
- Not traditional lenders: These loans come from private investors or companies instead of traditional banks or credit unions.
- Loan denial option: Hard money loans can be a lifeline for those with poor credit who have been denied traditional mortgages but have significant home equity.
- Higher interest rates: Due to the higher risk involved, interest rates for hard money loans are typically higher than those of conventional loans.
- Might require larger down payments: Borrowers might need to provide a larger down payment, often ranging from 20% to 30%, depending on the loan details and property value.
- More flexibility: Hard money lenders can offer more flexible terms and conditions, including less stringent credit score and debt-to-income ratio requirements. Hard money loans can also help homeowners avoid foreclosure.
- Potential for interest-only payments: These loans may offer the option of making interest-only payments initially, which can be beneficial for managing cash flow during a project’s early stages.
What are hard money loans used for?
Hard money loans are tailored to meet unique financing needs in Michigan’s real estate market. They are particularly useful for investors and individuals who need quick access to funds or face challenges qualifying for traditional loans. Here are some common scenarios where hard money loans can be beneficial:
Flipping a house: For Michigan investors involved in flipping homes, hard money loans provide fast funding for acquiring and renovating properties. These loans allow investors to quickly purchase and upgrade homes, and resell them for profit as soon as possible.
Buying an investment rental property: Hard money loans allow real estate investors to act quickly when purchasing rental properties, especially those needing immediate repairs. This allows them to capitalize on time-sensitive opportunities and potentially snatch up properties before their competitors.
Purchasing commercial real estate: Hard money loans are ideal for commercial properties because they offer speed and flexibility. When quick funding is crucial to secure a deal, these loans help investors take advantage of timely opportunities.
Borrowers who can’t qualify for traditional loans: Those with significant home equity but poor credit sometimes turn to hard money lenders in Michigan. These loans rely more on the property’s value than the borrower’s credit score, making them accessible for individuals who otherwise might not qualify for a traditional mortgage.
Homeowners facing foreclosure: Individuals nearing foreclosure can use hard money loans to refinance their debts or buy time to sell their property. This can provide a temporary solution, helping them avoid the negative impact of foreclosure on their credit report.
How much do hard money loans cost?
The cost of hard money loans is generally higher than traditional loans due to the increased risk and the convenience of quick funding. Here are some typical costs associated with hard money loans:
- Interest rates: These can range from 8% to 15%, depending on the lender’s risk assessment.
- Origination fees: Lenders may charge 1% to 5% of the total loan amount as an origination fee.
- Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative costs.
- Points: Lenders might charge points (a percentage of the loan amount) upfront, which can add to the initial cost of obtaining a loan.
There are many online calculators available to estimate your costs.
Alternatives to working with hard money lenders
If you’re curious about alternatives to hard money loans, here are a few options to consider:
Take out a second mortgage: A home equity loan or HELOC allows you to tap into your home’s equity, often at lower interest rates than hard money loans.
Cash-out refinance: This approach lets you refinance your existing mortgage, taking out cash based on your home’s current value. It usually offers better rates than hard money loans.
Borrow from family or friends: Getting a loan from family or friends can provide flexible terms and potentially lower interest rates, making it a cost-effective option.
Use a government-backed loan program: Loans from the FHA, VA, or USDA can help with lower down payments and more favorable interest rates.
Peer-to-peer loans: These loans are funded by individual investors via online platforms, offering terms that might be more advantageous than those of hard money lenders.
Specialized loan programs: Look into loans designed for fixer-uppers or investment property refinancing, which can replace a hard money loan with better terms.
Request a seller financing option: Some sellers are willing to finance the purchase directly, which can reduce closing costs and offer more lenient eligibility requirements.
How to buy before you sell
Sometimes, the perfect home hits the market when you’re not quite ready to sell your current one. Perhaps it’s an adorable three-bedroom bungalow in Grand Rapids or a rare mid-century modern home in Kalamazoo. If you’re a Michigan homeowner wanting to buy a new home before selling your current one, HomeLight offers a streamlined solution with its Buy Before You Sell program.
The Buy Before You Sell (BBYS) program allows you to tap into the equity of your existing home, making a stronger, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved within 24 hours, with no cost or commitment required. Once approved, you can purchase your new home confidently, then sell your current home vacant, avoiding the inconvenience of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While there’s a flat fee of 2.4% of your current home’s sale price, the potential savings in other areas could outweigh the cost. For instance, you might save on moving expenses, temporary housing, and possibly even the purchase price of your new home. Additionally, HomeLight’s BBYS fees are typically much lower than the interest rates on hard money loans, which range from 9.5% to 12%.
3 top hard money lenders in Michigan
Traditional lenders provide stability, but their approval process can be lengthy. For those needing quick closings, hard money lenders in Michigan are ideal for time-sensitive real estate deals. Here are three top-rated options:
MINO Lending Solutions
Founded in 2021, Detroit-based MINO Lending Solutions specializes in financing real estate investors. They are a full-service, nationwide lender and affiliated with Revela Inc., a property management software platform. MINO offers a variety of loan products, including hard money loans, rental refinance loans, fix-and-flip loans, commercial or multi-family loans, new construction loans, and more. The company’s hard money loan amounts range from $75,000 to $25 million, with terms from 6 to 36 months.
Lending clientele: Residential, commercial, multi-family, and development investors
Loan criteria: Up to 65% LTV (hard money loans)
MINO Lending Solutions touts a 5-star rating on Google based on nearly 50 reviews. Clients appreciate the company’s responsiveness and ability to deliver on promises, particularly in urgent and complex situations. “They are easy to work with, transparent and responsive, all you could ask for in a lender,” reads a recent review.
866-646-6536
Premium Hard Money
Headquartered in Michigan, Premium Hard Money specializes in providing hard money loan solutions to real estate investors. To date, they have closed and funded over 5,000 hard money loans and serve the states of Michigan, Illinois, and Ohio. According to their website, loans are processed in 24 hours, and 98% of loans are closed within five days or less. Premium Hard Money’s products include fix-and-flip loans, foreclosure payoff loans, new construction loans, and purchase and cash-out loans for turnkey properties.
Lending clientele: Residential, commercial, and development investors
Loan criteria: Contact Premium Hard Money for details
Premium Hard Money has a 5-star rating on Google based on a limited number of reviews. Clients praise the company’s customer service, quick turnaround, and organization. “Ancima is a lifesaver,” shared a client. “She was able to get me a loan for my flip project. The whole thing was really easy and straightforward. The closing happened really fast, and the service was top-notch.”
248-759-8855
Lima One Capital
Although not based in Michigan, Lima One Capital is a private lending company that offers hard money loans for real estate investors nationwide. They have funded over 28,000 projects, totaling more than $9 billion. Their loan programs include fix-and-flip/bridge, new construction, rental, short-term rental, and multi-family. Lima One Capital has been in business for over a decade and promises to get investors to the closing table fast.
Lending clientele: Residential, commercial, and development investors
Loan criteria: Up to 75% LTV (fix-and-flip), up to 80% LTV (bridge), up to 70% LTV (new construction), up to 80% LTV (rental), up to 70%–75% (short-term rental)
Lima One Capital has earned a 4-star rating on Google based on nearly 200 reviews. Clients frequently commend the company for its efficient processes, frequent communication, and professional staff. “After looking at a lot of private lenders for a mortgage on my rental properties, I went with Lima One,” wrote one reviewer. “They had the best rates and were easy to work with. I’ve had the loan for a few years now, and when an issue comes up, they handle it quickly and to my satisfaction.”
800-390-4212
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Should I partner with a hard money lender in Michigan?
Deciding whether a hard money loan is right for you in Michigan depends on your specific needs and real estate investment goals. Hard money loans are well-suited for real estate investors who need fast funding for projects with quick turnarounds or when traditional financing isn’t an option. If you’re prepared to handle the higher costs and shorter repayment terms, a hard money lender in Michigan might be the perfect fit for your next investment venture.
For homeowners wanting to leverage their home’s equity, HomeLight’s Buy Before You Sell program offers a compelling alternative. Instead of grappling with high interest rates, you’ll pay a flat fee while benefiting from a stronger offer on your new home and a smoother moving process.
As with any major financial decision, it’s important to align your choice with your long-term strategy and consult with a financial advisor. If you’re looking to connect with real estate agents in Michigan who have a roster of reliable hard money lenders, let HomeLight introduce you to top professionals who can guide you through your investment journey.
Header Image Source: (Qingwa/DepositPhotos)
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