Hard Money Loan
by Andy Kyle
You are looking to buy real estate; however, you are having difficulties qualifying through normal routes. What do you do? Is there any hope? Of course there is! Individuals and businesses alike can finance real estate through the use of hard money loans. These loans differ from your traditional business credit or personal credit loans.
A Hard money loan Is considered asset based.
In other words, the loan is financed through the backing of an asset. This is one of the reasons they call it a “hard” money loan. Most conventional or traditional loans are considered “soft” money loans because they do not rely upon a hard physical asset to guarantee repayment. These “hard” loans are generally more restrictive. They are usually funded by private individuals and not through public sources like banks.
These loans provide funds that represent a percentage of the fair market value of the asset being ransomed. Typically you will find that they will provide funding for approximately 70% of fair market value. This is done to protect the lender so that in the event of default they can recuperate and profit from selling to another buyer.
Things to consider when looking into appropriating a hard money loan are the interest rates and timely access to money and other factors.
Interest rates on these loans generally range anywhere from 12 to 20 percent annually. These rates can vary depending upon the lender and the credit of the person / business applying. In addition to the interest rates being higher than traditional and conventional loans, hard money loans usually include the purchasing of points which is money owed at the time of closing. Points can range anywhere from 2 to 10. A point generally is one percent of the amount being borrowed.
Accessibility is another key factor to look into when considering a hard money loan. You need to find out how quickly money will be available, how long the process will take for closing, etc. Also make sure you check out any fees or penalties that may exist for paying your debt off early. Starting your relationship with a lender long before is immensely helpful. Some lenders will require a lot of paperwork, others may not.
There are plenty of sources out there to provide this financing option. The smart way to go about finding a lender that you can trust is to start by asking for referrals. Make sure you do your research.
About The Author:
Corporate Credit Concepts specializes in hard money loan. For more information about hard money loan and how it might benefit your business, please visit: Hard Money Loan
Hard Money Loan