A hard money lender is a person who, like a bank or a mortgage company, loans money to people in need. Hard money lending usually takes place in the form of a seller-financed loan. Hard money lenders are also referred to as “non-recourse” lenders, meaning that if the loan goes unpaid, they don’t have to come after your home or your vehicle. But like any loan, there are fees that you should be aware of before agreeing to a hard money loan with this type of lender.
Because of the high risk of these loans, many hard money lenders work with borrowers through brokers and escrow agencies. Brokers place your loan with these lenders based on the terms that the broker and the lender agreed upon. These terms may include the interest rate, the repayment schedule, and even the amount of the down payment. Because of the high cost of these loans, buyers often have to get hard money loans from a local real estate agent. Some sellers want the buyer to secure the loan on their home; however, many sellers do not want the buyer to have access to their home.
Because some people are wary of hard money loans, some hard money lenders also offer short-term financing for a variety of uses. You can get hard money loans to pay off credit card debt, home improvement expenses, or even cover the expense of a vacation to Disney. Some buyers choose hard money loans to invest in high-end automobiles or art collections. But others use hard money loans for general purposes, such as paying bills or consolidating debts. With a short-term loan, a buyer can be assured that he or she will be able to make the scheduled repayment.
To obtain hard money lending, it is important to do research to find reputable lenders. For example, you can check with your local banking officials or check with online lenders to compare rates and terms. To find potential commercial properties to invest in, some investors turn to local real estate agents, brokers, and other lending sources. However, these sources may charge a fee for their services. In addition, many investors find that going directly to a hard money lender, either a broker or a lender, allows them to learn more about a property before making an offer. This allows the investor to better evaluate whether the property is right for them.
The process of obtaining hard money loans for commercial properties has changed over time. Today, many lenders are offering a short term cash advance on your mortgage application process that has slightly higher interest rates. In addition, the process of obtaining hard money loans for short term investment projects has also been complicated. Today, many lenders require applicants to submit additional forms and documents in order to receive approval for a short term loan.
In today’s challenging business environment, there are few borrowers who can afford traditional, long term mortgage loan options. For this reason, many new and experienced real estate professionals are turning to hard money lenders for a quick fix. While doing so may provide immediate relief, the long term outcome may not be as positive. Many hard money lenders will require borrowers to have a strong credit score and a successful business history in order to qualify for financing. In addition, the high interest rates associated with these types of loans will reflect this requirement. If you decide to pursue this type of financing, you should be prepared for the long term results.