Monthly Archives: February 2014

Reasons Why You Should Consider Hard Money Loans

Hard money loans are the most easy & hassle free loan today. It is mostly referred to real estate investors as asset based lending. The collateral on the loan becomes the real estate. They are far from conventional loans, since the underwriting guidelines that private money go by are far different from your local banks. Below are some of the few reasons why one should consider a hard money loans:

• Fast process – Hard money loans are closed in 5 – 14 days if compare to banks, once the complete documentation is done.
• Minimum Documentation – Less documentation as compare to tradition lenders. Loan amount is based on the value of the property and not depend on the credit rating.
• Credit Rating – Having a low credit score is not an issue, people with bankruptcy and credit scores under 490-600 do not have any problem, whereas banks always require a great credit history.
• Flexibility – Hard money loan are more flexible, as there are various options present to match up with your needs.
• Higher Risk Deals – Churches, non-profit are not a problem with hard money lenders, but are with traditional lenders who are concerned if they have to foreclose on a church loan, and the bad publicity they will receive.
• No personal guarantee require – Hard money Loans are based on the value of the property so no personal guarantee is required.

How to Get Hard Money Loans

Getting hard money loan is one of the most easiest way to get finance for your real estate investment. The easiest way of finding hard money lenders is through web. The major reason behind getting hard money easily is because, the borrower don’t need to go through the traditional way, as showing the credentials, such as job or credit history. Hard money loans are ONLY given on the basis of property you are buying. In-order to provide you hard money loan most of the lenders will check your credit report & other documents but on the other hand a true and experienced lenders will only check your documents only to determine your interest rate, origination points and the duration of loan.

If you are not able to get a true hard money lenders online then you can also check on REI (Real Estate Investment) club. Where you can talk to other investors & their review can help you to select the better hard money lenders  locally.  Hard money work more quickly as compare to the any bank or financial institutions, and can easily offer fund to the borrower with in 7 business days. Apart from this if you have faced any kind of bankruptcy in the last 24 months or don’t have current tax liens, you could easily get a hard money loan.

Even if a lender is advertising “no money down”, they are basically talking about the loan, which doesn’t include points. To sum up, if you want to get a hard money loan, it is necessary to find a good property and a true lender.

Investing with Hard Money Loans

Many real estate investors face situations where they require more money as compare the traditional lenders lend. At this point of time hard money lenders helps the investors by providing the required amount to the investor.

Hard money lenders are basically private money lender who offer loans for a short term. These loans have a very strict repayment schedule and the interest rate are also high as compare to the bank & financial institute. Hard money lenders also charge fees upfront, ranging between 4 – 10 points. Hard money lenders gives the investors to access the capital that is asset based, wherein the loan amount is secured. The rate of interest ranges between 14 to 18 percent annually and the term of the loan is normally six to twelve months.

Hard money lender may also require credit reports and well as documented experience in previous deals you have done along with the property as security. Further the money lender also perform property inspection before approving the hard money loans.

The terms & conditions for approving real estate investing with hard money loan, may vary for different lenders. The investors have to find the perfect lenders suitable for them, and ensure that they keep a good relationship with them, as such types of loans are useful for procuring or purchasing properties.

What Do Hard Money Lenders Offer?

Hard money lender – The term is a common one used in the financial world. Soft money is money that has easy terms and a flexible payment schedule. Hard money, on the other hand, has stricter terms to it and the repayment schedule is rigid and completely outlined by the loaner.

If you want to invest in real estate  then hard money lenders is actually a great resource for you. There are couple of reason behind this.

1. They give you money on hand so that you can make a purchase as soon as your offer is accepted.
2. It is also found in some cases that these lenders even lend closing cost money.
3. Apart from this, they are people, not institutions. So you can talk to them on a personal level and build trust with them, which makes it something you can really work with. But one should always keep in mind as you enter the field, that you never forget you have a business relationship and that a lot of money is on stake.

Hard money lenders can be a great resource for real estate investors. As they offer quick money without any hassle as of larger institutions. However on the other hand are little flexibility and are often tough. Because of that, you must make sure you establish a solid relationship and reputation with any hard money lenders you choose to work through. However, find the right one to make your real estate investment experience a successful one.