Hard Money Lenders
Hard money financing comes from investors or individuals and is mostly secured by any property that you offer as collateral. It is an option when traditional lenders will not approve a loan, or when you need a loan quickly.
Most lenders, and that includes hard money lenders, require proof that you will be able to repay a loan. Also, traditional lenders require good credit scores that indicate a solid history of timely repayment. They will also ask for proof of income that indicates that your debt to income ratio is low. The process itself is slow and time-consuming. Lenders of hard money will ask for these same details, but will not be too concerned with any negative feedback. They will be more concerned with the value of the collateral that you offer than your actual financial position. Most hard money loans are short term loans that may last from one to five years, unlike mortgages that can have periods of thirty years. Interest rates are also much higher than traditional loans.
Hard money is, therefore, is more costly than a bank and is taken by borrowers who are unable to get funding from traditional lenders at a time when they are in sore need of funds. Hard money lenders are more focused on the collateral that you offer, and if the papers of this are in order, the loans will get approved almost instantly.
Agreements entered into by lenders of hard money are flexible, and your situation is judged before any payment schedules are made out. They will always be willing to discuss interest and hard money loan repayments and offer mutually acceptable terms. The amount that lenders of hard money will offer against the collateral pledged with them will depend on the value that they put to the property. Any negative items against the property will reduce the value, and as hard money lenders rarely offer you more than 70 percent of the assessed value, they know they are well covered for the amount of money they have lent out. In case of default, they are well assured that they can take over the property and sell it so that their entire loan amount is recovered.
It makes sense to take a hard money loan when you are looking for a short term loan, and you know you will be able to repay it in the term agreed to. Investors who buy a property intending to increase its value and then immediately selling it can take good advantage of hard money loans. As the time between the buying and selling of such property is often less than a year, they will find it very convenient to repay the loan amount easily. The only disadvantage is that as loans are for a part of the value of the property, they have to have finance from other sources for the balance amount.
Hard money loans can be expensive and you can expect to be charged interest rates that may even go into double digits. You will do well to look for alternative methods of raising finance if this does not fit within your calculations. Real estate investor groups are a good source for finding the needed lenders of hard money, and here, you can take the aid of real estate agents, who will always be in touch with such groups.
Lenders of hard money use conservative methods to evaluate property so that they always have their loan amounts fully secured. Make sure that any property you offer as collateral for a hard money loan is in a fair state of repair, as otherwise, the lender may fix a low value, and this can affect the amount you can borrow.
Where to find the best Hard Money Loan Lenders
When you are looking for a hard money loan, there are many lenders out there that can provide you with the funds that you need. However, it is important to find the hard money loan lenders that will work best for your personal situation. You can find the best option using the tips that are shared in the following article. Read on for information that you can use as you consider the hard money loan lenders to find a great option for you.
First of all, you should determine exactly what you would like as far as a hard money loan goes. Is there a certain amount of money you would like to borrow? Do you have the property to secure the loan? How much is the property worth? It is a good idea to have some idea as to the worth of your property and the amount of loan you desire so you can approach the lender, once you find one, with solid information. This type of loan is not so much based on your credit score, but on the collateral that you put down for the funds.
Then, you should consider when you need the money. Typically, hard money loan lenders are able to provide funds much quicker than traditional lenders so if you need money rather quickly, this type of loan may be perfect for you. However, it can be helpful to consider exactly when it is that you need the loan.
Also, you will want to think about what kind of terms you are most comfortable with when it comes with a hard money loan. This type of loan is usually a short term loan and lasts approximately one to five years. Will that time period work for you? If so, you will want to find a lender that offers hard money loans.
Once you have given some thought to the terms of the loan that you desire, you will want to do your research on hard money loan lenders. You can do this by talking with colleagues who may have gone through the hard money loan process. Ask knowledgable coworkers any questions that you may have to help you determine if the lenders they have shared with you will be good options for your situation. Another way to get helpful recommendations for lenders is to search online. Just visit your favorite search engine and do a quick search. Look through the results to help you learn about the lenders that may work out for your situation.
After that, you can talk with the lenders that you felt may be a good fit. You can ask the questions that you have so you can determine if you want to follow through and complete an application. Gaining information from the lenders is very important because if you decide to go with them, you will be entering into a working relationship and knowing the terms of the loan and what the lender expects can help you make the decision.
Finally, you will want to complete the application for the hard money loan with the lender you find to be a good fit. You should share the information that they ask for and provide any necessary documentation. The more information you can provide, the quicker your loan will be funded. Once your application is complete, you will give it to the lender and they will likely share with your the time it takes to get approved and receive your funds.
To conclude, when you decide you want a hard money loan, it is important to find the lender that is right for you.
