Hard Money Lenders Salt Lake City: Flexible Financing
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you’re looking to fund your next real estate project in Salt Lake City, have a tight deadline, and need quick funding, you might want to consider a hard money loan.
Whether you aim to renovate a property in Sugar House or acquire a rental unit in The Avenues, hard money lenders in Salt Lake City can provide the speed and flexibility you need.
Hard money loans are an alternative form of financing that differs from traditional loans and are particularly useful for those with tight project timelines, limited startup capital, or credit issues.
If you’re not a real estate investor but need to bridge the timing gap between buying and selling a home, we’ll share some alternatives to help you leverage your home’s equity.
This guide will explain the essentials of hard money lending in Salt Lake City, helping you decide if this financial tool fits 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 individual or company that offers short-term loans secured by real estate. Unlike traditional lenders, who focus heavily on the borrower’s creditworthiness and income, hard money lenders in Salt Lake City prioritize the value of the property being used as collateral.
Their loan programs are popular among real estate investors, such as house flippers and those buying rental properties, who need quick access to funds and flexible terms. Hard money lenders use after-repair value (ARV) — the estimated value of a property after all renovations and repairs are completed — to determine the loan amount they are willing to offer. They’ll typically lend a percentage of the ARV to ensure the investment’s profitability and security.
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. As with any secured loan, failure to repay a hard money loan can result in the lender seizing the asset, such as a house, to recover their investment.
How does a hard money loan work?
If you’re a real estate investor looking for a financing option that provides speed and flexibility, connecting with hard money lenders in Salt Lake City could be beneficial. Here’s a quick rundown of how hard money loans work:
- Short-term loan: These loans usually have a repayment period of 6–24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders may extend the term up to 36 months if needed.
- Faster funding option: When you need to close a deal quickly, hard money loans can be approved within days, compared to the 30 to 50 days typical for a mortgage loan.
- Less focus on creditworthiness: Approval relies less on your credit score or income history and more on the property’s value.
- More focus on property value: These loans require collateral, such as a home, and are based on the loan-to-value ratio of the property.
- Not traditional lenders: Individual investors or private lending companies usually provide hard money loans, not traditional banks.
- Loan denial option: These loans are often used by those with poor credit who have been denied a mortgage but possess significant home equity.
- Higher interest rates: Due to higher risk, these loans have higher interest rates than traditional mortgages.
- Might require larger down payments: Borrowers may need to provide a larger down payment, sometimes up to 20%–30%, depending on the property’s value and loan specifics.
- More flexibility: With less government regulation, hard money lenders in Salt Lake City can set flexible credit scores and debt-to-income (DTI) criteria, and loans can help avoid foreclosure.
- Potential for interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially.
What are hard money loans used for?
Hard money loans are designed to address specific financing needs. They’re typically best suited for investors who require quick funding or may have difficulty qualifying for traditional bank loans.
Let’s learn more about what hard money loans are typically used for:
- Flipping a house: For Salt Lake City 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, make necessary improvements, and resell them for profit quickly.
- Buying an investment rental property: Investors seeking rental properties can use hard money loans to snap up properties fast, especially those needing immediate repairs. Compared to traditional bank loans, hard money loans allow landlords to complete renovations and generate rental income more quickly.
- Purchasing commercial real estate: Hard money loans are often used in commercial real estate transactions due to their flexibility and quick closing times. They are particularly useful in situations where timing is crucial, and a quick decision can mean the difference between securing a valuable investment or missing out altogether.
- Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit or other disqualifying issues sometimes approach hard money lenders in Salt Lake City for assistance. With hard money loans, qualification is determined more by the asset’s worth than the borrower’s credit score.
- Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance their debts or buy time to sell the property. This can provide a temporary solution to avoid losing their home or a foreclosure mark on their credit report.
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, who is looking for a way to leverage your current home’s equity, here are a few options 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 than 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 help buyers purchase homes with lower down payments and reduced interest rates.
- Peer-to-peer loan: These loans are provided 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: Sometimes, sellers may agree to finance the purchase, resulting in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing pops up when you’re least expecting it. Maybe it’s a rare mid-century modern home or a two-bedroom condo within walking distance of your job.
If you’re a Salt Lake City homeowner wanting to buy a new home before selling your current one, HomeLight offers an innovative solution that streamlines the process.
The Buy Before You Sell (BBYS) program allows you to leverage the equity in your existing home to make a stronger, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved in 24 hours or less, with no cost or commitment required. Once approved, you can confidently purchase your next home and then sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
Although there’s a flat fee of 2.4% of your current home’s sold price, the potential savings in other areas might outweigh the cost.
For example, you might save on moving expenses, temporary housing, and even the final purchase price of your new home.
On top of that, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
3 top hard money lenders in Salt Lake City
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 Salt Lake City.
Miller Bates LLC
Miller Bates provides specialized financing solutions for real estate investors. They focus on delivering tailored hard money loan products to meet their client’s diverse needs and ensure efficient funding solutions across various real estate investment scenarios.
Lending clientele: Residential and commercial real estate investors, including developers
Loan criteria: LTV 50% up to 65% of ARV
They hold a strong Google rating of 5.0 stars, indicating high satisfaction among their clientele. Clients appreciate their responsive customer service and efficient handling of loan applications.
801-990-2222
Private Money Utah
Private Money Utah specializes in providing hard money loans for real estate investors in Utah. It offers flexible loan programs designed to meet the needs of both residential and commercial property investors.
Lending clientele: Residential and commercial real estate investors
Loan criteria: LTV up to 65% of ARV
Private Money Utah holds a 4.7-star rating on Google. Clients frequently highlight their professionalism, efficiency in funding, and clear communication.
435-565-1768
Gravity Capital LLC
Gravity Capital LLC is a leading provider of private lending services, specializing in hard money loans for real estate investments.
Lending clientele: Residential and commercial real estate investors
Loan criteria: LTV 50% up to 60% of ARV
Gravity Capital has a solid reputation with a 4.2-star rating on Google. Clients appreciate their efficient process and personalized service. One reviewer noted, “They always have money and will consider almost any deal,” while another noted, “I had a great experience with Gravity.”
801-750-3838
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 Salt Lake City?
Deciding whether to use a hard money lender in Salt Lake City depends on your unique situation and real estate investment objectives. Here are some key points to consider:
- Quick turnaround projects: Hard money loans are perfect for projects that require a fast turnaround.
- Alternative to traditional financing: Ideal when traditional financing is not an option.
- Higher costs and shorter terms: Be prepared to manage higher costs and shorter repayment terms for the benefit of fast, flexible funding.
- HomeLight’s Buy Before You Sell program: For homeowners looking to tap into their home’s equity, consider HomeLight’s Buy Before You Sell program.
- Flat fee: Pay a small flat fee instead of a high interest rate.
- Competitive offer: Benefit from a more competitive offer and a simplified move.
- Long-term strategy: Always consider your long-term strategy and consult with a financial advisor to ensure alignment with your overall investment goals.
To find investor-friendly real estate agents in Salt Lake City who have access to trusted hard money lenders, let HomeLight introduce you to top professionals in your area.
Header Image Source: (Anh Phan/Unsplash)
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