Top 5 Situations For Whom Hard Money Loans Are Ideal!
Category : Hard Money Loans
Hard money loans are quite different from bank loans. A hard money loan is simply a short-term loan secured by real property. The terms are usually around 12 months, but the loan term can be extended to longer terms of 2-5 years. The loan requires monthly payments of only interest or interest and some principal with a balloon payment at the end of the term. Interest rates for hard money loans range from 10-15% and points can range anywhere from 2 – 4% of the total amount loaned.
The amount that hard money lenders are able to lend to the borrower is primarily based on the value of the subject property. Many hard money lenders will lend up to 65 – 75% of the current value of the property. Some lenders will lend based on the after repair value (ARV) which is the estimated value of the property after the borrower has improved the property. A borrower can get a hard money loan on almost any type of property including single-family residential, multi-family residential, commercial, land, industrial many other types of properties that fall outside of the conventional parameters likes rehab loans, construction loans, bridge loans, land loans, mixed use property, non-owner occupied rentals used to secure startup capital for new ventures.
Hard money loans are ideal for below top 5 situations:
1. Fix and Flips
2. Land Loans
3. Construction Loans
4. When the Buyer has credit issues.
5. When a real estate investor needs to act quickly
Why should use a hard money loan?
Borrowers choose to use hard money loans for many different reasons. Hard money lenders have the ability to fund the loan quickly. In most situations, hard money loans can be funded within a week. The ability to obtain fast funding is a significant advantage for a real estate investor. Especially when the real estate investor is trying to acquire a property with many competing bids, a quick close with a hard money loan will get a seller’s attention and set their offer apart from the rest of the buyers offering slow conventional financing.
Hard money loans are backed by the value of the property, not by the creditworthiness of the borrower. Borrowers who are rejected or cannot find conventional financing due to their low credit score, bad income history, a recent foreclosure or short sale, they can still obtain a hard money loan if they have sufficient equity in the property that is being used as collateral. The hard money lenders provide you flexible loan repayment terms. So, if times are tough you can get by with only paying interest each month or with only paying the balloon repayment at the end. This makes it easier for you in the long run instead of causing you to make a hefty payment each month.
Conclusion:
Hard money loans are the faster route to financing than bank loans. They have relaxed approval standards, are fast to get, and require less paperwork. Hard money loans may be wonderful for you when you need them in a crunch and can’t get the money from anywhere else.
You can consider a hard money loan to fund one of your future real estate deals. If you have questions or would like to receive additional information about hard money loans, please contact Magna Capital Group, Inc today at (310) 734 4044 or email at info@magnaloans.com.