18
Oct

Are You Looking for a Hard Money Loan? Learn More Here

Written by Best Financial Magzine. Posted in Real estate secured lending, Reasons to invest in commercial real estate, Secured short term loans

Investment property mortgage lenders

There are a lot of people who want to get certain kinds of financing but do not have the credit they need. Some of these people turn to hard money mortgage lenders. If someone wants to get involved in commercial real estate investing, this may be the way to go for many people. The hard money lending process is not well understood by a lot of people. Here is some more information for people who may be interested in learning more about hard money rehab loans.

The hard money loan process is different from other kinds of lending. ‘

When you go for any traditional loan, the loan amount and the approval at all is based on a person’s credit score and history. Hard money loans and hard money mortgage lenders provide loans to people who do not have the credit but have something else they can put up against the loan. If someone owns their own home, they can put that up to qualify for a hard money loan.

The process is a lot shorter. Anyone who has a traditional mortgage knows how long it can take to be approved for and then receive the money. The hard money loan process generally takes about 72 hours. Yes, within 72 hours of submitting the loan documents a person can have their money. If someone is looking to involved in commercial property investing, they may need a large down payment so hard money mortgage lenders can really help.

Hard money loans can be secured to make repairs on a property.

Hard money loans are typically used for investments in commercial properties and to buy other property. As such, loans can be made to make repairs on that property. When this is something that is needed, the lender will ask the borrower for what is referred to as a draw request. This is a form that is used to document any repairs that were made on the property. They will inspect the property and then reimburse for the repairs. Most of the time, they will not pay in advance for repairs to property.

The interest rate is higher.

While the interest rate is different from lender to lender, it is much higher than what a person gets when they have good credit and can range from about 10 to 18%. This is often something that can be negotiated.

The loans are shorter.

Traditional mortgages are generally built to last for years and years. They are not means to be paid off right away. This is how they are able to charge a lower interest rate. Hard money mortgage lenders give loans that are much shorter. The term can range from about three months to a year. If a person needs longer than that to pay the loan off, they will most likely get a higher interest rate and may end up with higher costs over all.

Just like other loans, there are costs associated with hard money loans.

Any real estate purchases come along with them title policies, appraisals and insurance needs. These things all cost money. These costs can range from just a few hundred dollars to several thousands. Most of these deals have origination points attached. These can add between two and ten points.

A borrower’s credit score may still matter.

Hard money mortgage lenders do check the credit of would be borrowers. Unlike what they do when they are looking at traditional borrowers, hard money lenders do not look very much at credit scores. They do look at credit reports for things like foreclosures, bankruptcies and collections. They want to see that the borrower will be able to repay the loan. While the loan is based on the collateral that is put up, they still need to see that the person is responsible enough to pay the loan back.

There is often a down payment required.

Most of the time, when hard money mortgage lenders offer secured short term loans, they require the borrowers to put something down. They want to make sure the people to whom they give money will be able to pay it back.

The bottom line is that if you have collateral, you may be able to get help make your commercial real estate investment.

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