Hard Money FAQ

The business purpose of a hard money loan is to provide short-term financing for real estate investors who need to quickly acquire or rehab a property. These loans can be used for a variety of purposes, such as buying a fixer-upper, paying off outstanding debts, or making repairs and renovations to a property. They are generally used for properties that are not suitable for traditional bank financing due to the properties condition, lack of rental history, occupancy or borrower creditworthiness.

Points are the fees paid by the borrower to FNH Capital for acting as a broker in a hard money loan transaction that covers the cost of origination.

  • Residential up to 70%.
  • Commercial up to 55%
  • Land up to 50%

Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met.

Title insurance is a specialized insurance policy that protects you and your mortgage lender against mistakes made in a title search.

An interest-only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period.

A balloon payment is a large, lump-sum payment that is typically made at the end of a loan term. It is called a “balloon” payment because it is typically much larger than the regular monthly payments that are made throughout the loan term.

Prepaid interest charges are charges due at closing for any daily interest that accrues on your loan between the date you close on your mortgage loan and the period covered by your first monthly mortgage payment.

Mortgage default occurs when a borrower fails to make the required payments on their mortgage loan. When a borrower defaults on their mortgage, it means that they have missed one or more payments and are in danger of losing their home to foreclosure.

A Non-QM loan, or a non-qualified mortgage, is a type of mortgage loan that allows you to qualify based on alternative methods, instead of the traditional income verification required for most loans. Common examples include bank statements, using assets as income or equity in the property.

In a trust deed, a fractional interest refers to the percentage of ownership that a beneficiary has in the trust.  The fractional interests of the beneficiaries can be equal or unequal, depending on the terms of the trust. Trust deeds often specify the percentage of ownership that each beneficiary has, as well as the rights and responsibilities associated with that ownership.

In the United States, an accredited investor is a person or entity that is legally permitted to participate in certain investment opportunities due to their financial standing or professional experience. There are several ways to qualify as an accredited investor, including having a net worth of at least $1 million (excluding the value of one’s primary residence), having an annual income of at least $200,000 for the past two years (or $300,000 combined with a spouse), or having certain professional certifications or designations, such as being a licensed attorney, accountant, or securities broker.

“Buy and hold” is a real estate investing strategy where an investor purchases a property with the intention of holding onto it for a long period of time, typically several years or more. The goal is to generate passive income through rent, or to see appreciation in the property’s value over time. It is a long-term investment strategy and it is not a get rich quick scheme.

To be suitable you should have either (1) a net worth, exclusive of home, furnishings, and automobile, of at least $500,000 or (2) a net worth, exclusive of home, furnishings, and automobile, of at least $250,000 and a gross annual income of at least $65,000.

The prime rate is a benchmark interest rate that is used as a reference rate for some loans and other credit products. It is the rate that banks charge to their most creditworthy customers, and it is typically a few percentage points higher than the federal funds rate, which is the rate that banks charge each other for overnight loans.

The federal funds rate is the interest rate at which banks lend to each other overnight. It is the rate that banks charge each other for overnight loans of federal funds, which are the reserves held by banks at the Federal Reserve. The federal funds rate is determined by the supply and demand for federal funds in the overnight lending market, and it is typically influenced by the monetary policy of the Federal Reserve.

A property preliminary report is a document that provides initial information about a specific piece of real estate. It typically includes information such as the property’s location, size, and condition, as well as information about zoning, land use, and any potential environmental or other issues that may affect the property. The report may also include information about the property’s ownership history and any recent sales or transactions. The report is typically used by real estate professionals and investors to help assess the potential value and suitability of a property for a particular purpose.