Acquiring Hard Money from a Hard Money Lender

Providing hard money loans are not one of the main functions of a bank. There are several forms of customer’s credits and their respective procedures in banking. The result is usually identical. The client gets the hard money from a hard money lender after completing all the necessary conditions.

It is very important to remember the process of getting such loan from hard money lender. You need to know how long will it take for a customer to finish all documents. Generally, processing of all paper works is quite a lot. On average, the customer takes three to seven business days to complete the paper works, including 4 meetings with different banks.

Furthermore, a recent study shows that almost thirty percent of the positive decisions on loans is reviewed by the credit committee after reconsideration.

Banks and some investors that have great experience in their activities have developed their techniques in greatly simplifying the process of getting hard money loan by any customer. In some banks, the decision about providing hard money loan secured by real estate like apartments, land, cottages, country houses, and nonresidential premises can be made within 2 business days, and the set of provided documents is limited to a minimum. This further attracts real estate owners to avail such loans.

The credit worthiness of the borrower is evaluated, not on the basis of reference, but based on his real income. Lenders of hard money strive hard to help their customers at any stage of cooperation and to create for them the most comfortable conditions. In some lenders of hard money, there is an opportunity of flexibility in the formation of a payment schedule and introduction of a phased repayment of the debt or partial early repayment of the hard money loan. Some lenders of hard money evaluate the value of the property on the basis of information based on its fair market value at the time of the hard money loan.

The requirement of compulsory insurance of the borrower’s life is waived by a hard money lender when he feels there is no need for such. In recent years, many lenders provide loans to borrowers without collateral, the financial crisis that hit the economy changed the scenario. Financial institutions have made the necessary adjustments, and borrowers can get hard money loan only by securing it by real estate. Today, you can conveniently get a hard money loan in a short period of time if you have it secured by a real estate.

Hard Money Lenders: Get To Know Them

Hard money lenders are private investors whom lend their money out to borrowers at high rates, which banks would not do. These lenders provide loans to people who need money and have a property to secure such loan.

Hard money loans are easier to get than bank loans, and they are funded very fast. These loans are very common especially to real estate investors as asset based lending. In hard money lending, the collateral for the loan becomes the real estate. These are very different from traditional loans because the underwriting guidelines are different from banks.

Hard money is the only solution for those seeking urgent funding sources. Also, these loans are helpful to those who have situations where time is important and need to close quickly in a matter of days, and not weeks, for their money. For hard money lending, credit history is not a factor that determines the approval of a loan application. These lenders are not credit based lenders, although there are some that do check the credit scores of the borrower.

Hard money lenders provide money on a short term basis, normally 6 months to a year, so that borrowers can use it for various profitable purposes. Hard money loans may include real estate loan types such refinance, development, bridge, rehab, acquisition and others. Investors who use hard money to finance their projects usually have financial gain using hard money. The interest rate of hard money is usually at 14 percent and above and 2-10 points in original fees. Because hard money are expensive than traditional sources, borrowers always make sure that they have a financial gain using hard money. In that way, the high interest or points usually is offset by the monetary gain.

Hard money loans vary differently between lenders. Fees and charges such as due diligence fee, commitment fee and application fee, may be charged by lenders and varies significantly between lenders. Lender will generally fund a loan for 50 percent loan-to-value on raw land and up to 70 percent loan-to-value on the finished product. Lenders will fund a loan at an interest rate of 14 percent for a period of six months to three years. Also, borrowers are charged between 2-10 points as an original free, which is to be paid out of proceeds. Lastly, when choosing hard money lenders, borrowers need to understand how different options fit best in their plans.