Hard Money Lenders St. Louis: Your Quick Financing Guide
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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 eyeing a prime piece of real estate in St. Louis and need quick financing? Whether you’re planning to transform a fixer-upper in Carondelet or invest in a rental property in the Central West End, St. Louis hard money lenders can offer the quick and adaptable financing solution you need. A hard money loan is a versatile option for those who need immediate capital and can be particularly useful for projects with shorter timelines or credit challenges.
For St. Louis homeowners not involved in real estate investment but needing to bridge the gap between buying and selling a home, there are alternatives to consider. In this article, we’ll cover the essentials of hard money lending in St. Louis, helping you understand if this financing option suits your property investment or home-buying needs.
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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 heavily scrutinize the borrower’s credit and income, hard money lenders focus on the property’s value as collateral.
Their services are popular with house flippers and rental property investors who need quick access to funds and flexible loan terms. Hard money lenders determine loan amounts based on the after-repair value (ARV) — the estimated value of a property after renovations. They typically lend a percentage of the ARV to ensure a profitable and secure investment.
Interest rates for hard money loans are higher, ranging from 8% to 15% or more, with repayment terms between 6 to 24 months. Borrowers also face costs such as origination fees, closing costs, and points. If a borrower defaults, the lender can seize the property to recover their investment.
How does a hard money loan work?
For those considering real estate investments in St. Louis, hard money loans offer a viable financing option. Here’s a breakdown of how these loans work:
- Short-term loan: These loans typically have a repayment period of 6 to 24 months, much shorter than the 15- or 30-year terms of traditional mortgages.
- Faster funding option: Hard money loans can be approved within days, unlike conventional loans, which can take 30 to 50 days.
- 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: The loan amount is based on the loan-to-value ratio of the property being used as collateral.
- Not traditional lenders: These loans are offered by private investors or companies, not traditional banks.
- Loan denial option: Ideal for those with poor credit who have been denied a mortgage but have built-up home equity.
- Higher interest rates: Due to the higher risk, hard money loans have interest rates higher than traditional mortgages.
- Might require larger down payments: Borrowers may need a down payment of 20%–30%, depending on the property and loan specifics.
- More flexibility: With less regulation, these lenders can set flexible debt-to-income criteria, helping some homeowners avoid foreclosure.
- Potential for interest-only payments: Select loans may offer initial interest-only or deferred payments, unlike traditional mortgages.
What are hard money loans used for?
Hard money loans can be a lifeline for various real estate needs in St. Louis. Whether you’re an investor or a homeowner facing financial challenges, these loans offer quick and flexible solutions. Let’s explore the typical uses for hard money loans:
Flipping a house: St. Louis investors often use hard money loans to flip houses. These loans provide fast cash to buy and renovate properties, allowing investors to improve and sell homes quickly for a profit.
Buying an investment rental property: Hard money loans are ideal for those looking to acquire rental properties. They allow for quick purchases and essential renovations, helping landlords get properties ready for tenants faster than with traditional financing.
Purchasing commercial real estate: When it comes to commercial real estate, hard money loans offer the speed and flexibility needed for quick decisions. These loans are especially useful in competitive markets where timing is critical to secure valuable investments.
Borrowers who can’t qualify for traditional loans: Individuals with significant home equity but low credit scores sometimes seek out hard money loans. These loans focus on the property’s value rather than the borrower’s credit history, making them accessible to those who might not qualify for traditional financing.
Homeowners facing foreclosure: Those at risk of foreclosure can use hard money loans to refinance their debts or buy time to sell their homes. This option can help prevent foreclosure and protect their credit records.
How much do hard money loans cost?
Hard money loans often come with higher costs due to the added risk and convenience. Here are some of the typical expenses:
- Interest rates: These range from 8% to 15% or more, reflecting the lender’s risk assessment.
- Origination fees: Lenders usually charge 1% to 5% of the loan amount upfront.
- Closing costs: These can include legal, appraisal, and other administrative fees.
- Points: Points, which are a percentage of the loan amount, are often charged at closing and can range from 2% to 4%, depending on the lender.
Use online calculators to estimate these costs and plan accordingly.
Alternatives to working with hard money lenders
If you’re a homeowner looking for ways to leverage your home’s equity, here are a few practical alternatives to hard money loans:
Take out a second mortgage: Consider a home equity loan or HELOC for funds at lower interest rates than hard money loans.
Cash-out refinance: This allows you to refinance your property and pull out cash, typically with lower interest rates.
Borrow from family or friends: Loans from family or friends can offer flexible repayment terms and lower or no interest rates.
Use a government-backed loan program: Programs like FHA, VA, or USDA provide assistance with lower down payments and reduced interest rates.
Peer-to-peer loans: Platforms like Funding Circle offer loans similar to hard money loans but with potentially different terms.
Specialized loan programs: Explore loans for fixer-uppers or investment property refinancing to replace existing hard money loans.
Request a seller financing option: Some sellers may finance the purchase themselves, offering lower closing costs and easier eligibility requirements.
How to buy before you sell
Sometimes, your dream home comes on the market when you least expect it. Maybe it’s a historic two-story craftsman or a spacious suburban house with great schools nearby. If you’re a St. Louis homeowner wanting to buy a new home before selling your current one, HomeLight offers a seamless solution with the Buy Before You Sell program.
Buy Before You Sell (BBYS) lets you leverage your current home’s equity to make a competitive, non-contingent offer on a new property. If your home qualifies, you can get approval for your equity unlock amount within 24 hours with no cost or commitment. This approval allows you to buy your next home with confidence and sell your current one vacant, avoiding the stress of moving twice.
Here’s how HomeLight Buy Before You Sell works:
Although the program has a flat fee of 2.4% of your current home’s sale price, it can potentially save you money in other areas like moving expenses, temporary housing, and the final purchase price of your new home. Plus, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently fall between 9.5% to 12%.
3 top hard money lenders in St. Louis
While traditional lenders provide stability, their approval processes can be time-consuming. Hard money lenders can offer an alternative for faster closings. Here are three established St. Louis-based hard money lenders you might want to consider:
One West Hard Money
Based in St. Louis, One West Hard Money specializes in providing hard money loans to real estate investors. They offer various loan programs such as fix-and-flip, fix-and-rent, buy and wholesale, cash out, and joint venture agreements. Eligible property types include single-family homes, multi-family properties (up to four units), condos, townhomes, and commercial properties. One West Hard Money strives to close loans within seven to ten days. In addition to St. Louis County, they also serve St. Charles, Jefferson, Franklin, Lincoln, and Warren counties.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Up to 65%–70% ARV
One West Hard Money has earned a 4.7-star rating on Google and an A+ rating from the Better Business Bureau (BBB). Clients often highlight the company’s quick approval process, knowledgeable staff, and transparent communication. “Tim and Jean are amazing at what they do,” shared a client. “This was my first experience with utilizing hard money. They were excellent and very responsive. Highly recommend!”
314-907-3730
FasterFunds Lending
Located in nearby O’Fallon, FasterFunds Lending was founded in 2015 to provide real estate investors with quick and reliable hard money loans. They work with rehabbers, landlords, and wholesalers, lending on non-owner occupied, single-family properties (although they will consider 1–4 unit multi-family properties if the deal makes sense).
FasterFunds Lending serves the St. Louis metro area on the Missouri side and aims to close loans in as little as five to seven days.
Lending clientele: Residential real estate investors
Loan criteria: Up to 75% ARV
FasterFunds Lending has earned a 4.9-star rating on Google based on nearly 40 reviews. Clients praise the company for their professionalism, valuable advice, and smooth lending process. “FasterFunds Lending is one of the easiest, quick lenders to work with!” reads a recent review. “Everyone on their team has been so kind and extremely helpful. Their communication is incredible, and they work so quickly!”
636-223-4262
The Investor’s Edge
The Investor’s Edge is an innovative, Utah-based company that helps you find, fund, and flip real estate. They work with brand-new and expert investors alike, offering memberships in 45 states, including Missouri. In addition to fix-and-flip loans, the company touts long-term rental DSCR loans and new construction loans. Approximately 37% of their borrowers qualify for 100% financing loans, and closing is often completed within 15 business days.
Lending clientele: Residential real estate investors
Loan criteria: Up to 74% ARV
The Investor’s Edge has earned a 4.8-star rating on Google with well over 900 reviews and an A+ rating from the Better Business Bureau (BBB). Clients frequently commend the company’s knowledgeable staff, quick loan processing, and excellent customer service. “Absolutely amazing experience in assisting me with my first full fix-and-flip job,” wrote a reviewer. “They are extremely communicative, dedicate time to you beyond what is needed, and are always there to help educate you or handle any issues.”
800-284-0076
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 St. Louis?
Deciding whether a hard money loan is right for you depends on your specific situation and real estate investment goals. Hard money loans are best suited for real estate investors who need quick access to capital for projects with tight deadlines or when traditional financing isn’t an option. If you can manage higher costs and shorter repayment terms in exchange for fast and flexible funding, a hard money lender in St. Louis could be the perfect fit for your next investment.
For homeowners looking to leverage their home’s equity without facing high interest rates, consider HomeLight’s Buy Before You Sell program. This option allows you to make a competitive offer on a new home while paying a small flat fee, simplifying your move and avoiding the burden of high interest rates.
As with any major financial decision, it’s important to consider your long-term strategy. Consult with a financial advisor to make sure your decision aligns with your overall investment goals. If you’re looking to connect with investor-friendly real estate agents in St. Louis who have access to trusted hard money lenders, let HomeLight introduce you to top professionals in your area.
Header Image Source: (Mark Serafino/ Unsplash)
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