What is a Hard Money Loan?
Imagine that your kid brother has found himself in a real mess – drowning in $50,000 of bad credit card debt from gambling, wild nights carousing the streets of Las Vegas, lavish designer clothing purchases and dining out, ordering $50 bottles of wine and filet mignon. When he comes to you, begging for your help to save his $70,000 mortgage teetering on foreclosure, you groan. You’ve been wise with money your whole life, you’ve always planned for the future and you’ve saved quite a penny. You know it’s risky — he is a bad apple and may or may not pay you back. “I’ll even pay yah 18% interest,” he pleads. Finally, you give in. Video: Hard Money & Construction Loans A hard money loan is private money loaned to risky borrowers who can’t verify their income or meet traditional standards in terms of employment information or credit scores. The amount given out is based upon the value of the property’s “after-repair value.” People faced with foreclosure might get a hard money loan to save t
A ‘hard money’ loan, also known as a ‘private money’ loan, ‘equity-based’ loan, or ‘asset- based’ loan is based primarily on real estate collateral. Private lenders fund the loans rather than institutions such as banks. What is the most common use for hard money? Our most common loans are first mortgages used for purchases or cash-out refinances on non-owner occupied properties. We recommend that you take the time to understand when hard money is an appropriate option and which borrowers benefit from the use of hard money. Do you cooperate with real estate brokers and other mortgage brokers? Yes, if you need a hard money source for a client or other contact, we are a direct lender and that means you can qualify for referring broker fees, if you are properly licensed, and earn fees as a referring broker, How much equity can my clients get? We consider lending up to 60% of the property value. Our 60% maximum does not mean we lend 60% in every situation, or on all property types. How do m
The term “Hard money” loan evolved from a general meaning relating to a loan for hard cash. The meaning has evolved through the years to include non-conventional real estate loans, privately funded loans, second trust deeds and equity loans. Generally, a hard money loan is one in which the lender can approve the loan based primarily upon real estate equity. With a hard money loan, the borrower is able to side step much of the usual time required to close a conventional loan. Even if the borrower is unemployed, has bad credit or has no credit, the loan may be approved based on the equity in the property. On occasion, a borrower may have flawless credit and still be willing to pay more to obtain a hard money loan if he is in a hurry to close. Hard money loans can be obtained on commercial properties in loan amounts of 50k and up, at a maximum of 50 – 75% of the appraised value of the property. There is generally an initial fee of 4 or more percentage points to close the loan and rates ar
The term “Hard Money Loan”, as it is referred to in the real estate or lending world, is a type of non-bankable loan. Usually this means a loan where the lender can approve the loan request based upon the value of the assets and the equity in the assets, side stepping much of the usual time consuming documentation and verification that a lender might require to lend the same amount of money under “Soft” terms. Hard money loans are those loans usually funded at a higher cost to the borrower either because they are non- bankable by a traditional lender, and/or the borrower is in a hurry and can’t afford to wait for weeks or months for a traditional lender.
A “hard money loan” is, at its simplest, a loan for hard cash. In the commercial real estate and lending business, a hard money loan is a non-conventional real estate loan, such as a privately funded loan, second/third/fourth trust deeds and equity loans. The lender approves a real estate loan request based on real estate equity or collateral. Typically, the loan-to-value ratios are such that the value of the property well exceeds the value of the loan. Why do borrowers choose hard money loans over conventional loans? Because hard money loans are not backed by government safeguards, there are less stringent underwriting guidelines required. Documentation that is typically required to apply for a conventional bank loan, such as income statements and tax returns, are not required to qualify for hard money loans. With less paperwork required, the process for funding hard money loans is fast. Where a conventional loan may take months to process, a hard money loan can be completed in 10 day
