In this article, allow me to introduce you to another type of loan intended for aiding borrowers and for business purposes. The Hard money loan is another special type of loan where funds are being secured by real property instead of the borrower’s reliability. A Hard money loan is a loan that is obtained from a private lender who has been backed by a substantial asset like real estate. These loans usually have shorter terms and a higher rate than traditional mortgages. As the loan is being derived from a private or non-traditional lender. The asset being purchased is used as the collateral for the loan and this reduces the risk for the borrower and the lender. Hard money loans are basically used in transactions concerning real estate and the lender is usually an individual or a company. This is also because banks do not offer such loans.
A simpler example is this: if you want to buy a new house but your current residence has not fully been sold yet. This is where the hard money loan comes in as it could be a way to use your house as collateral and free up funds to buy your new place. It because the funds can be issued quickly. The process is quite attractive for homeowners at the risk of foreclosure. Other reasons for getting a hard money loan include buying an investment property and flipping houses. The biggest difference between a hard money loan and other loans is that your house actually secures the loans.
How Does the Hard Money Loan Work?
As a borrower, your credit score is very vital and very much needed when it comes to acquiring loans. However, when trying to acquire a Hard Money loan, your credit score and reliability is not essential. There are other factors that the lenders must and will consider before the approval of the loan. Some of these factors include your home equity, loan-to-value (LTV) ratio, and Debt-to-income (DTI) ratio. Once all these have been approved, the hard money loans can be issued very quickly. There is an exchange for this quick process; specifically the higher interest rates and the origination fees. Hard money loans are indeed more expensive because of the higher risk the lender is taking by offering the loan.
What are the best Hard Money Lenders in the Industry?
Acquiring hard money loans from a lender seems to be a very good choice when you are faced with very hard decisions to make or things didn’t quite go according to your plans. The return payments are always very expensive but the loan is quite easy and quick to get. The time plan can prove to be very convenient. Another thing to look out for is the perfect place to get your hard money loan. I will list out five of the best hard money loan company with very excellent reputations in the industry.
- CoreVest
- RCN Capital
- Groundfloor
- LendingHome
- Lima One Capital
There are many other hard money loan companies where you can get your loans quite efficiently as well. I only list these five because they are my best recommendations and have fairer terms compared to other lenders in the industry. They also close their deals way quicker without changing their terms at the last minute. If you want to review their loan amounts, interest rates, minimum credit scores, and time. You can visit their websites and get more information about that.
