A Arizona hard money Mortgage is a specific type of asset-based Mortgage financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money Mortgages are typically issued at much higher interest rates than conventional commercial or residential property Mortgages and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge Mortgage, which usually has similar criteria for lending as well as cost to the borrowers. Hard money is essentially an asset-based Mortgage with a high interest rate. The credit score of the borrower is not important, as the Mortgage is secured by the value of the collateral property. Many hard money mortgages are made by private investors, generally in their local areas. Typically, the biggest Mortgage one can expect would be between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000–70,000 against it. This low LTV (Mortgage to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.
Many Arizona Hard Money Mortgages are based on a percentage of the “quick-sale value” or “purchase price at auction” of the subject property depending on the specific lender. This is called the Mortgage-to-value or LTV ratio and typically hovers between 60 and 70% depending on which of our lenders you choose to use for your purchase. For the purpose of determining an LTV, the word “value” is defined as “today’s purchase price” for some of our lenders and “current market value” for others. Your final purchase price at auction would dictate which of our private hard money lenders we would recommend to finance your purchase and finalize the transaction. Private hard money lenders fund the transaction in 24 hours in accordance with ARS statutes associated with purchase of homes at trustee sales.