Learn the real truth about hard money loans

Here are some facts about home hard money loans that you may find useful:

1. Most hard money loans are secured by a property with 30%-50% equity, so the investor is well protected.

2. A residential money loan is a loan in which the borrower obtains funds based on the value of a specific commercial or residential property, as opposed to traditional lending criteria banks look at, such as credit scores, tax returns and income statements.

3. Hard money loans offer higher interest rates and a lower loan-to-value ratio. Hard money interest rates can start at 15%, 18% or higher.

4. Private lenders are private investors and commercial hard money lenders and not institutions. There are no strict guidelines that lenders must adhere to.

5. Hard Money Home Loans are temporary bridge loans used for real estate purchases, refinancing, foreclosures, and investors who need to close quickly.

6. Hardcore lenders can choose who they want to lend to and what terms they want. There are no specific underwriting guidelines that they must follow like banks must.

7. Most private investors look for a safe investment with a high return.

8. Because these loans are based on the equity of the property, lenders generally cover a smaller area so they can inspect the property they are lending on and determine if the property’s value justifies their loan.

9. There may be prepayment penalties, even if you only need a hard money loan for a few weeks, so make sure you read everything and understand the terms; Otherwise, you could find yourself stuck in a high-interest loan for 6 months or more.

Why get a money loan

Having trouble finding traditional financing quickly to rehab your investment property? A hard money loan may be the answer for you, especially if your credit is less than perfect. Yes, the interest rates are higher, but you have the freedom to act quickly and rehab your investment property so you can trade it in and make your profit. When you get a hard money loan, be careful and know what you are getting yourself into. Check references. As with any business, there are unscrupulous lenders, so be thorough and check out the lender. Get referrals if not a bad idea either.