Hard Money Explained
Hard money loans are financing options available from lenders providing alternative financing to the regular banks and financial institutions. Hard money loans are also known as “private capital”, “private equity” and “private financing” loans, as the money is supplied from private lenders or private investment groups.
There are no background and credit checks usually required because the loans are based on the investor’s requirements for risk limitation. This makes them ideal for those who have trouble raising credit through other channels.
Hard money loans are commonly used as bridging loans and are often used to raise capital to purchase and repair properties in order to make them saleable again. Real estate is a common form of collateral that can make a hard money loan easy to obtain because lenders have a limited risk-exposure. These equity types of hard money loan are based on the fast-sale value of the property.
Interest rates for hard money loans are noticeably higher than regular bank or mortgage loans and will typically run from 10-15%. There are also fees due on which are indicated as “points” or (short for percentage points). So for a $100k loan, a 3-point fee would equate to $3k to be paid to the lender Its worthwhile keeping an eye on those fees as they can turn out to be significant.
Hard money loans are ideal for acquisition and redevelopment, fast turnaround and many other projects. Different lenders may specialize in different hard money loan types so it is wise to look around a bit before committing to any lender in particular.
Why Hard Money Private Lenders
Hard money private loans come in many different forms which are not provided for by financial institutions or banks; they have no particular guidelines other than varied state laws that licensed lenders have to obey. The type of loan available and the conditions of the lender are dependent upon the investors who supply the actual funds for this type of finance to decide where their horizon of personal risk will be.
Visiting all the websites of the potential investors or lenders can be very time consuming so we have provided a form that can be filled in and you can then receive quotations from all the licensed hard money lenders in your area. This allows you not only to have access to the best lenders in your area offering hard money loans but also a chance to make some competitive price comparisons too. Offering your information to them rather than applying one by one offers a huge advantage.
A side-by-side comparison can save big bucks when it comes to looking at the fees that can be applicable on some loans. An extra percentage point here or there on the fees can turn out to be expensive and a comparison of quotations allows you to find the best deal.