When hard money lenders are mentioned, some people begin to imagine some unkempt lenders who carry out their lending business in the streets and dark alleys with exorbitant interest rates. However, today, we have professional hard money lenders who can sort your financial needs at terms favorable to you.
A hard money loan refers to a short-term loan that is secured by real estate. Private investors usually fund them, unlike conventional lenders like banks and credit unions. The repayment period for the hard money loans is generally 12 months, even though there is a possibility of loan extensions of up to five years. The hard money loan is repaid monthly with interest and a balloon payment at the end of the repayment period.
The amount of money that you can qualify for is based on the value of the property you are putting up as security. You can use the property that you already own or the one that you are in the process of acquiring as security for the hard money loan.
Hard money lenders, in most cases, focus on the value of the property more than the borrower’s creditworthiness. If you cannot access the traditional loans because of a recent foreclosure or a poor credit score, you can still get the hard money loan. The hard money lenders will offer to finance even in situations where the bank would not provide the loan.
You can get the hard money loan with almost all types of property, which includes the single-family house, multi-family residential, land, commercial, and industrial property. There are hard money lenders that specialize in a specific property such as residential and may not offer loans where land is used as security.
The majority of hard money lenders in most cases specialize in particular niches based on their market research and riskiness. That means if you need to ask the potential hard money lender upfront about the types of loans that they offer. For instance, some hard money lenders do not lend to the owner-occupied property because of the rules in such cases.
Some situations make hard money borrowing the best option. If your credit history is good and you have no issues with short sale or foreclosure, it is recommended that you go for the traditional loans from the mainstream lending institutions. However, when the banks are not an option, then you need to find a credible hard money lender to help you meet your financial obligations.
Check out this link to learn more: https://en.wikipedia.org/wiki/Private_money.
