Hard Money Lenders Missouri: Fast and Flexible Loans

Published on July 29th, 2024
12 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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Selling or buying property when managing real estate financing in Missouri can be challenging, especially when traditional loans aren’t an option. A hard money loan might be the solution if you need quick funding with flexible terms. These loans are particularly useful for real estate investors in competitive cities like St. Louis and Kansas City.

Hard money lenders offer an alternative route to secure funds based on the property’s value rather than the borrower’s creditworthiness. Whether you’re flipping homes in Springfield or investing in rental properties in Columbia, understanding how hard money loans work can help you make informed decisions about your real estate ventures.

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 nontraditional lender that offers short-term loans secured by real estate. They typically work with clients such as house flippers and real estate investors who need quick access to funds. Hard money lenders determine loan amounts based on the estimated value of the property after renovations, which is the after-repair value (ARV).

Interest rates for hard money loans are generally higher than those of traditional loans, often including additional fees. If a borrower fails to repay the loan, the lender can foreclose on the property. This type of financing is ideal for those who need immediate capital and have a clear exit strategy to repay the loan.

Hard money loans typically have higher interest rates, ranging from 8% to 15% or more, and shorter repayment periods, usually between 6 to 24 months. Additional costs can include origination fees, closing costs, and points, which are a percentage of the loan amount paid upfront.

How does a hard money loan work?

Hard money loans in Missouri offer unique benefits for real estate investors. Here’s what you need to know:

Short-term loan: Hard money loans are typically short-term, ranging from six months to a few years, making them ideal for quick projects.
Faster funding option: These loans can be funded much quicker than traditional mortgages, often within a few days, providing a fast solution for time-sensitive deals.
Less focus on creditworthiness: Lenders prioritize the property’s value over the borrower’s credit score, making it accessible for those with less-than-perfect credit.
More focus on property value: The loan-to-value ratio is based on the property’s current and potential value, emphasizing the deal’s potential.
Not traditional lenders: These are private investors or companies, not banks, offering more flexible terms tailored to specific investment needs.
Loan denial option: Hard money lenders can deny loans if they believe the property does not have sufficient potential value or if the borrower lacks a solid plan.
Higher interest rates: Expect interest rates between 8% to 15%, reflecting the higher risk and shorter term.
Might require larger down payments: Borrowers might need to put down 20%–30% of the property’s value, higher than typical mortgage requirements.
More flexibility: These loans can be tailored to individual projects, offering terms that suit specific investment strategies.
Potential for interest-only payments: Borrowers may have the option to make interest-only payments during the loan term, reducing monthly costs.

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What are hard money loans used for?

Hard money loans serve various purposes in real estate investments. Here’s how they can be useful:

Flipping a house: These loans provide quick funding to purchase and renovate properties for resale. Flipping homes often require immediate capital to seize opportunities.
Buying an investment rental property: Investors can use hard money loans to purchase rental properties, enabling them to add income-generating assets to their portfolio quickly.
Purchasing commercial real estate: Hard money loans can finance renovations and acquisitions of commercial properties, which might not qualify for traditional loans.
Borrowers who can’t qualify for traditional loans: Those with less-than-perfect credit or unique situations can leverage the home equity to secure a hard money loan.
Homeowners facing foreclosure: A hard money loan can provide the necessary funds to avoid foreclosure, giving homeowners a chance to stabilize their finances.

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 a homeowner rather than an investor, here are a few alternatives to consider:

Take out a second mortgage: If you have substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide the needed funds at a lower interest rate compared to a hard money loan.

Cash-out refinance: This option allows you to 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: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a more affordable option.

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: These loans are provided by individual investors through lending platforms, functioning similarly to hard money loans but often with different terms.

Specialized loan programs: Consider specialized 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, which can result 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 homeowners who need to buy a new home before selling their current one. This program allows you to make a competitive offer on your new home without the contingency of selling your current property first. With this program, HomeLight advances the funds needed for your purchase, and you repay them once your old home sells.

Here’s how HomeLight Buy Before You Sell works:

Benefits of this program include avoiding the stress of moving twice, eliminating the uncertainty of timing, and having the flexibility to buy your dream home when it becomes available. The cost for this service is typically between 9.5% to 12% of the loan amount. HomeLight’s Buy Before You Sell program is a smart choice for homeowners looking to buy a new home before selling your current one.

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3 top hard money lenders in Missouri

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 Missouri.

FasterFunds Lending

FasterFunds Lending, based in St. Louis, Missouri, specializes in providing hard money loans for real estate investors. They focus on offering fast and reliable funding solutions for fix and flip projects, rental properties, and other real estate investment opportunities.

Lending clientele: Residential and commercial real estate investors

Loan criteria: LTV up to 75% of ARV

FasterFunds Lending has earned a 4.9-star rating on Google. Clients often highlight the company’s efficiency, transparency, and excellent customer service. Many appreciate the smooth and quick loan process, with particular praise for the helpfulness and professionalism of the staff.

fasterfundslending.com

636-223-4262

KC Investor Funding

KC Investor Funding, based in Kansas City, specializes in providing hard money loans to real estate investors. They offer a variety of loan programs, including fix and flip, rental, and bridge loans. They can usually close loans within 7-10 days.

Lending clientele: Residential and commercial real estate investors. They are willing to fund properties such as single-family homes, multifamily units, and commercial buildings.

Loan criteria: LTV up to 70% of ARV

KC Investor Funding has earned a 5.0-star rating on Google. Reviews laud the company for its fast approval process, professional staff, and transparent communication.

kcinvestorfunding.com

816-293-2999

NorthOak Investment

North Oak Investment provides hard money loans tailored for real estate investors. Founded to support investors in achieving their property investment goals, it focuses on delivering personalized service and flexible financing solutions.

Lending clientele: Residential real estate investors

Loan criteria: LTV 60% up to 80% of ARV

North Oak Investment has a 4.6-star rating on Google and an A+ rating on BBB. Clients appreciate their responsiveness, transparency, and efficient loan processing.

northoakinvestment.com

816-640-4980

Should I partner with a hard money lender in Missouri?

Working with a hard money lender in Missouri depends on your specific needs and goals. Here are some final notes to consider:

Best suited for real estate investors: Hard money loans are ideal for investors who need quick access to capital for projects like house flipping or purchasing rental properties. These loans offer flexibility and faster funding but have higher interest rates and fees.
Consider the costs and risks: While hard money loans can provide immediate funding, they often have higher costs and associated risks. It’s essential to weigh these factors against the potential benefits of your specific project.
Alternative for homeowners: If you are a homeowner looking to leverage your equity without the high costs and risks of hard money loans, consider HomeLight’s Buy Before You Sell program. This program provides the necessary funds to buy your new home before selling your current one, offering a stress-free and cost-effective solution.
Evaluate your situation: Assess your financial situation, project goals, and the urgency of your funding needs to determine the best financing option for your real estate endeavors in Missouri. Whether you choose a hard money loan or an alternative like HomeLight’s Buy Before You Sell program, be sure that it aligns with your investment strategy and long-term objectives.

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