6 Major Characteristics of a Hard Money Loan
Category : Hard Money Loans
If you have opportunity to invest in property, you may need a hard money loan to proceed with the purchase. Hard money loan is a financing tool which helps to acquire residential or commercial properties so that you can purchase, and then resell it.
A hard money loan has many important features.
1. A hard money loan is one where investors gain access to the funds to purchase a property for resale. The idea is to make a profit, but in many cases is not to live in the home. Yet, a hard money loan can help a home owner because it can allow an investor to purchase their home when they desperately need to sell it quickly.
2. A hard money loan can only be based on collateral. The collateral is the home or housing units. What is more, because of the risky nature of the venture, only approximately 50% to 75% of the normal property value will ever be covered by a hard money loan. This is because the value being considered in the loan is based on the immediate purchase price, which refers to the amount of money the seller could get if he was forced to sell within a one to three month period.
3. To get an investment property loan, you don’t need to have good credit. The important considerations are whether you will be able to pay back the loan, whether the property is worth the money being lent, and whether you have a sizeable down payment.
4. You should never expect to have an early payment clause on a hard money investment property loan. This is because the very nature of the funding product is that the money is just being lent for a short time. No one expects you to keep the loan in the long term. You are not legally bound to pay off the loan immediately, but the expectation is that you will.
5. A private money loan has a higher rate of interest than prime mortgage rates. However, it is much riskier for the lender. The person usually has worse credit and probably does not live in the home. The people who take out a hard money loan often would not even qualify for a regular mortgage. By getting a hard money loan, they can take advantage of an opportunity they might not otherwise be able to fund, and therefore be able to make some money.
6. Hard money loans are faster to approve and are usually approved within a few days. You usually have the ability to borrow up to 75% of the property’s value.
Conclusions: A hard money loan is the right choice for you to purchase residential or commercial property. The advantages of easy access, convenient requirements and rapid processing allow you to make your dreams of real estate a reality. If you need a hard money loan and have any additional queries, call Magna Capital Group, Inc at (323) 655-6888 or visit https://magnaloans.com/beta/