For those of you that don’t understand what a hard money loan is, here is a little more information on them.
Although hard money loans for real estate have been around for quite some time, many people still do not fully understand what they are. In fact, many have the wrong idea about the loans. This is probably why many people will refer to the lenders as loan sharks. The truth is that these are special kinds of loans advanced by private individuals or small firms. The lender will advance the money for real estate purposes such as renovations or repairs. He will base the loan mainly on the value of the property and not so much on the creditworthiness of the borrower.
One of the main advantages that drive individuals to seeking hard money loans is the quick processing. Applying and processing a real estate loan through the normal channels such as banks or any other financial institution takes a considerable amount of time. As a matter of fact, the loan seeker or applicant may have to wait for weeks to know whether the loan was approved or not. However, the time period is much shorter when using hard money providers. This is mainly because they focus more on the current value of the property. Many will also have the latest information on the prevailing prices in the market.
The loan is collateral-based. This means that the main determining factor is the value of the property. In fact, some lenders may overlook a person’s creditworthiness if the property has a good value. Knowing this, many prospective borrowers including those with a not-so-good v credit repayment history will try to improve the property prior to talking to a provider. A well-kept property that is located in a good or prime location will be more appealing. Since the value of the property is key, the requirements from the borrower will be fewer. This is one explanation why many individuals seek them as a last-resort.
Many people are usually tasked in finding the right lender. They will be overwhelmed by the large number of potential lenders. Some will lack the necessary knowledge on how to go about the whole process of borrowing. Finding a good lender requires some research and time. The prospective money seeker should also consider some aspects. These include; the money lender’s reputation, his experience, the terms and conditions and much more. Getting the right hard money loans for real estate will only be a matter of time as long as the individual exercises due diligence and also follows the right approach.
Here is a video that will also explain a little more about what a hard money loan is and how it works –
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