Hard Money Lenders New Jersey: Fast Real Estate Loans
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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 looking to secure funding for your next real estate project in New Jersey? Whether you’re planning to flip a Tudor-style home in Newark or invest in a rental property in Jersey City, hard money lenders in NJ can offer the quick and flexible financing you need. Hard money loans serve as an alternative to traditional loans, making them particularly advantageous for those with tight project timelines, limited upfront funds, or less-than-perfect credit.
If you’re not a real estate investor but need to bridge the timing gap between purchasing and selling a home, we’ll discuss some alternatives to help you leverage your home’s equity. This article will walk you through the essentials of hard money lending in New Jersey, helping you determine whether this financial solution aligns with your real estate investment or home-buying goals.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
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 company or individual providing short-term loans secured by real estate. Unlike conventional lenders who prioritize the borrower’s credit score and income, hard money lenders in NJ emphasize the property’s value as collateral.
These lenders work with clients such as house flippers and rental property investors who need quick, flexible funding. They determine loan amounts based on the after-repair value (ARV) — the estimated worth of a property after renovations. Typically, they lend a percentage of the ARV to ensure a safe and profitable investment.
Hard money loans come with higher interest rates, generally between 8% and 15%, and have short repayment periods of 6 to 24 months. Additional costs may include origination fees, closing costs, and points. Failure to repay a hard money loan can lead to the lender seizing the property to recover their investment.
How does a hard money loan work?
If you’re considering a hard money loan in New Jersey, understanding how these loans work can help you decide if they’re the right fit. Here’s a quick overview:
- Short-term loan: These loans typically have a repayment period of 6 to 24 months, unlike the 15- or 30-year terms seen with conventional mortgages.
- Faster funding option: Hard money loans can be approved in days, compared to the 30 to 50 days required for traditional mortgage approval.
- Less focus on creditworthiness: Approval depends less on your credit score or income history and more on the property’s potential value.
- More focus on property value: These loans are based on the loan-to-value ratio of the property used as collateral.
- Not traditional lenders: Hard money loans are provided by private investors or companies rather than traditional banks.
- Loan denial option: Ideal for those with poor credit who have significant home equity but have been denied a conventional mortgage.
- Higher interest rates: Due to increased risk, these loans tout higher interest rates than traditional mortgages.
- Might require larger down payments: Borrowers may need to make a down payment of up to 20%–30% depending on the loan specifics.
- More flexibility: With less regulation, hard money lenders can offer flexible terms, including customized debt-to-income criteria, helping borrowers avoid foreclosure.
- Potential for interest-only payments: Hard money loans may allow for interest-only or deferred payments, providing flexibility during the loan term.
What are hard money loans used for?
Hard money loans address specific financing needs in the New Jersey real estate market. These loans are attractive to investors who require fast access to cash or have difficulty securing traditional bank loans. Here’s a closer look at how these loans can be used:
Flipping a house: For New Jersey investors focused on flipping homes, hard money loans offer fast access to cash for purchasing and renovating properties. These quick-turnaround loans help flippers acquire properties in competitive markets, complete renovations, and sell them for profit in a short timeframe.
Buying an investment rental property: Investors shopping for rental properties can leverage hard money loans to quickly secure them and make immediate repairs. Compared to traditional bank loans, hard money loans allow landlords to renovate and start generating rental income faster.
Purchasing commercial real estate: In commercial real estate deals, hard money loans offer advantages due to their flexibility and faster closing timelines. This can be especially beneficial in time-sensitive situations where a quick decision is crucial to securing a desirable investment opportunity.
Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit sometimes seek out hard money lenders. These loans emphasize the asset’s value more so than the borrower’s credit score, making them accessible to those who might otherwise be disqualified.
Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance their debts or buy time to sell their property. This can provide a temporary solution to avoid losing their home or having a foreclosure mark on their credit report.
How much do hard money loans cost?
Hard money loans typically come with higher costs compared to traditional loans. This reflects the increased risk assumed by the lender in exchange for offering faster funding and potentially more flexible terms. 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, appraisal, and other administrative fees.
- Points: Lenders might charge points (a percentage of the loan amount) upfront, increasing the initial cost.
You can use online calculators to estimate these costs accurately.
Alternatives to working with hard money lenders
If you’re a New Jersey homeowner looking to leverage your home’s equity, here are a few alternatives you might want to consider:
Take out a second mortgage: With substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide funds at lower interest rates compared to hard money loans.
Cash-out refinance: This option allows you to refinance an existing property, pulling out cash to finance your new investment, often at lower interest rates than hard money loans.
Borrow from family or friends: Borrowing from family or friends for a personal loan can potentially provide more flexible repayment options and lower (or no) interest rates compared to traditional lenders.
Use a government-backed loan program: Programs offered by the FHA, VA, or USDA can help buyers purchase homes with lower down payments and reduced interest rates.
Peer-to-peer loans: These loans are funded by individual investors through lending platforms like Funding Circle. They function similarly to hard money loans but often have different terms.
Specialized loan programs: If you already have a hard money loan and want to replace it, consider specialized loans for fixer-uppers or investment property refinancing.
Request a seller financing option: On occasion, sellers may agree to finance the purchase themselves, which can result in lower closing costs and more flexible lending terms.
How to buy before you sell
When the perfect home hits the market, timing is everything. Whether it’s a two-bedroom condo with a private roof deck in Hoboken or a historic stone carriage house in Princeton, HomeLight’s Buy Before You Sell program can help you act fast.
The Buy Before You Sell (BBYS) program allows you to leverage the equity in your current home to make a strong, non-contingent offer on a new property. If your home qualifies, you can get approval for your equity unlock amount in just 24 hours, with no upfront cost or commitment. This allows you to purchase your new home and then sell your existing one without the stress of moving twice.
Here’s how HomeLight Buy Before You Sell works:
Though there is a flat fee of 2.4% of your home’s sold price, the savings in other areas can offset this cost. You might save on moving expenses, avoid temporary housing costs, and potentially secure a better price on your new home. Plus, HomeLight’s BBYS fees are often much lower than bridge loan interest rates, which range from 9.5% to 12%.
3 top hard money lenders in NJ
Sometimes, traditional lenders just don’t cut it for every real estate deal. If you need to act fast to take advantage of a great opportunity, consider working with one of these top-rated hard money lenders in New Jersey.
HardMoneyMan.com LLC
Based in Ortley Beach, HardMoneyMan.com LLC has been providing hard money loans to real estate investors nationwide since 1998. To date, the company has funded more than 26,000 investment property loans, totaling $3.5 billion. They offer several different loan types, including fix-and-flip loans, spec home construction loans, 30-year rental loans, short-term rental loans, and 5-plus unit multi-family loans. Borrowers can often get approved within 24 hours, and closing takes between seven and 20 days.
Lending clientele: Real estate investors; residential and development properties
Loan criteria: Varies by loan program; typically up to 70%–80% ARV
HardMoneyMan.com LLC boasts a 4.8-star rating on Google based on over 30 reviews. Clients praise owner Ken for his speed and efficiency, excellent communication, and willingness to answer questions. “[Ken] made this process so easy and straightforward that it makes me think, ‘What was I waiting for?’” wrote one reviewer. “He followed through and made himself available at all times for any question.”
516-526-8445
Asset Based Lending, LLC
Founded in 2010, Asset Based Lending, LLC is a direct hard money lender based in Jersey City. They lend in 15 states, including New Jersey, and work exclusively with real estate investors (LLCs or corporations). Eligible properties include single and multi-family residential real estate, as well as mixed-use commercial properties with residential components. Borrowers can get pre-approved within 24 hours and close in as few as three days.
Lending clientele: Real estate investors; residential and development properties
Loan criteria: Up to 60%–65% ARV
Asset Based Lending, LLC holds a 4.2-star rating on Google based on over 90 reviews. Clients commend their straightforward approach, ability to facilitate timely closings, and prompt responses. “I used Asset Based Lending for the first time recently with their fix-and-flip program, and they closed two very complex transactions in just over a week and a half from start to finish,” shared a client. “They were incredibly professional, knowledgeable, and competitive.”
201-389-9368
Stratton Equities
Headquartered in Pine Brook, Stratton Equities is a direct hard money lender that serves real estate investors nationwide. Founded in 2017, the company offers hard money loans for a variety of investment properties with rates starting at 9.99%. Terms for hard money loans typically range from 9 to 24 months, with loan amounts spanning from $100,000 to $5 million. These loans usually close within 21 to 35 days on average.
Lending clientele: Real estate investors; residential, commercial, and development properties
Loan criteria: Up to 75% LTV (hard money)
Stratton Equities has been accredited by the Better Business Bureau since 2019 and maintains an A+ rating. They also have a 4.9-star rating on Google from over 50 reviews. Client reviews highlight the company’s resourcefulness, competitive rates, and clear communication. “Stratton helped me pursue my venture while offering their expertise and professionalism,” wrote one reviewer. “They were responsive, caring, and committed to helping me.”
800-962-6613
Investing in real estate?
Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.
Should I partner with a hard money lender in New Jersey?
Deciding if a hard money loan is the right choice for you depends on your specific real estate ambitions. These loans are excellent for New Jersey investors who need quick cash for projects that require a fast turnaround or when traditional loans aren’t feasible. If you can manage the higher interest rates and shorter terms, a hard money lender in NJ can provide the speed and flexibility you need.
However, if you’re a homeowner aiming to leverage your equity, consider HomeLight’s Buy Before You Sell program as an alternative. This program allows you to pay a small flat fee instead of facing high interest rates, making your offer more competitive and simplifying the buying and selling process.
When making such significant financial decisions, it’s important to think about your long-term plans and seek advice from a financial advisor. HomeLight can connect you with experienced, investor-friendly real estate agents in New Jersey who can help you navigate your options and find trusted hard money lenders.
Header Image Source: (mandritoiu/DepositPhotos)
- "Bridge Loan Rates: Current 2024 Interest Rates," Vaster (October 2023)
- "What are the Closing Costs of a Hard Money Loans?", Marquee Funding Group (January 2022)
- "Why Do Hard Money Lenders Require A Down Payment?", RCN Capital (April 2024)
- "What Is Loan-to-Value and Why Does it Matter?", U.S. News (March 2024)
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