Top 10 Things To Know About Hard Money Loans

Top 10 Things To Know About Hard Money Loans
[hr toptext=”” size=”tiny”] 1) Most hard money loans are secured by a property with 30% -50% equity, so the investor is well protected. Much more protected than any investment with no collateral. aka: stocks and even bonds nowaday.

2) A hard money loan is a loan in which the borrower gets funds based on the value of a property as opposed to the traditional lending criteria that banks look for such as credit scores, tax returns, and income statements.

3) Hard money offers higher interest rates and lower loan to value ratios. Hard money interest rates can start at 15%, 18%, 20% or higher.

4) Private lenders are private investors and commercial hard money lenders and not institutions. There are no firm guidelines that hard money lenders must stick to.

5) Residential hard-money loans are bridge loans which are used for real estate acquisitions, refinancing, foreclosures and investors who need to close quickly.

6) Hard lenders can choose who they want to loan to and the terms they want. There are no specific underwriting guidelines that they need to go by like banks must follow.

7) Most hard money lenders are looking for a safe and secure investment with a high return.

8) Because these loans are based on the property’s equity, hard money lenders will examine the property to determine if the property value justifies their loan to you.

9) There may be prepayment penalties even if you only need a hard money loan for just a few weeks so make sure that you read everything and comprehend the terms otherwise you could find yourself trapped in a high interest loan for 6 months or longer.

10) Be advised that if the property does not sell before the expiration of the finance term, you will have to pay another round of origination fees to extend your financing.

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