The Basic Requirements of Hard Money Lending

Hard money lending is monetary tools offered by hard money lenders to investors who need a substantial amount of money in a short period of time. Hard money loans are, in some ways, the same as conventional commercial loans, but do not have a rigorous process like banks and other traditional financial institutions. These loans are based on the value of the asset or property offered as security. Hence, most hard money lenders are not concerned about the credit rating and monthly income of the borrower.

The main concern of hard money lenders falls on the property itself. The hard money lenders usually approve an amount of loan that is equal to 60 to 75 percent of the value of the property involved. A third party appraiser determines the value of the property pledged as collateral. The appraisal of the property is usually dated within six of the loan approval.

If you urgently need money and your bank denies your loan application, then  a hard money loan is a great. Although getting this type of loan is easy, you need to prepare some important things in order to expedite the loan process a bit. Below are some important requirements that you should remember before applying for a hard money loan.

The executive summary

The executive summary is very important when a borrower is applying for a hard money loan. The executive summary contains important information that will help convince the hard money lender why your asset makes a worthy investment. The borrower needs to complete a form that lists down all his experiences, most updated resume and colored pictures of the property involved.

The title report

The title report is another very important requirement when availing a hard money loan. It is a must that borrowers have a clean title record of their property. All hard money lenders always make sure that the current title of the property can appropriately be documented. The title report can be secured from local title companies. This report can be issued in a matter of one week, and the price varies from $500 to $2000.

The evidence of the insurance

Most hard money lenders require the borrowers to maintain the insurance on the property. Also, the lender will be the one to specify the amount that the borrower should be able to borrow. In situations where the borrower’s business is located in a commercial property, the lender will require additional coverage.

Hard money lending does not only cover existing properties. It also covers a property that is still under construction. This is referred as new construction loan.

The Right Way to Deal with Hard Money Lenders

Hard Money Lenders are getting common day by day and many people have found that that communicating with these hard money lenders is really difficult. However it is not the partial truth. There are dozens and dozens of hard money lenders around and so is the various types of borrowers so if you have come to know from someone that he did not had a good experience with some hard money lender then do not jump to conclusions that all the hard money lenders are the same. The question arises even if they are not same then what is the right way of making a deal with the hard money lender?

There are number of questions the borrower should know like he may see that the borrower is having the knowledge or the experience to move forward? Or the borrower may be able to succeed in the project he seems to borrow the money for? Does the borrower has a strong character and would be able to take himself or the company out of the financial chaos?

So these are the only few concerns of the lenders and if you can answer these questions according to their satisfaction then making a deal with them is not a problem at all. So before going to these lenders make sure you are prepared a bit. See the following points to know more about it.

1. Clarity

You should have clear statement, sort of a summary that why you need the money and how will you be able to give it back. Hard money lenders do not like going back from the start of the story to your tragedy. You need to have a plan in which you should have a win-win strategy which should be precise as well as concise. Because if you will make it complicated, you deal will become complicated as well.

2. Check your Facts

Even though you are in a complicated situation and you are not too sure what to do. Before you rush to do the hard money lenders, prepare yourself with all the facts and update information related to your business or deal or for whatever purpose you are about to borrow the money or else the lender may consider you a disinterested borrower. Make a file of all the facts with your plan and give it to lender if you need a valuable service.

With these points you will surely impress the lender and would make a good deal.