Hard money loans are generally short term loans that are obtained from private money lenders. In most of the cases, the term of the loans is 12 months. In very rare instances the term might go for two to five years. The repayment has to be done on a monthly basis. For some, it is only the interest, and for others, it is the interest with some principle.
In this article, we will see the things that you need to know about hard money loans.
When comparing to banks, the procedures that one has to go through to get hard money loans is very easy. But just because it is easy, it does not mean that the money that you are getting can be used for any purpose. When it comes to hand money loans, it is the best option for certain situations like fix and flips, land loans, construction loans, if the buyer has credit issues, when there is a sudden need in the real estate. If used for the above-mentioned purposes, then hard money loans are really great.
Who should use it?
It is easy to say that anyone can use hard money loans because everyone will have financial needs. But that is not how things should be viewed. But hard money loans should be opted by people who are facing an urgent financial situation. The hard money loan lenders will just take a max of one week to process and give the cash, which is not the case in banks. The next reason why people can opt for hard money loans is when their loan application is rejected by the banks because of certain reasons.
Interest rates and points
The interest rates and points that are charged by the lenders are not fixed. It will vary from one person to another. At the end of the day, it is their money, and they can set the rules. It is said the comparing to most of the other hard money lenders LA hard money lender has less interest rates. In general, the interest rate that is fixed by the predominant lenders will be somewhere between 10 to 15 percent. There are good possibilities that the interest rate might vary according to the amount that is borrowed.
Unlike banks, hard money loan lenders do not care about credit history. All they want is collateral that has the minimum value of the principle that is being borrowed. Since there is no pre-written set of rules, there are no specific requirements as such. There are also certain instances that the lender has given the money based on the trust that they have in the business and in the person.