Non-QM vs Hard Money loans

[Diana Rivera]

Hi everyone! I'm looking into loan options. I just got off the phone from speaking to a lender. I don't qualify for an FHA or regular conventional loan due to the fact that I did a short sale in 2016 so I was asking him about doing a hard money loan. He told me that even with hard money loans which are for short term investments you are required to keep the loan for 6 months or a year??? He said if not they will hit you with a pre-payment penalty? Is this true? He recommended I do a Non-QM loan, which I had never heard about but he says if I do the full document version of this loan ( they verify income) I can put 10% down instead of 20% as with a hard money loan and the interest would be 6.75% vs 12-15% with a hard money loan. Obviously the Non-QM loan sounds like a better option, but I'm still stuck on what he said about having to hold the property for at least 6 months regardless of loan option. Anybody know the ins and outs of hard money loans that can verify this?

[Bob Woelfel]

@Diana Rivera there are no blanket statement loans out there. Some HML will require a penalty, but many won't. Shop around and find someone in your local market. Good luck.