Hard money loans are short-term real estate loans that use the borrower’s existing property to secure the loan. They are similar in structure to bridge loans but may be used for different purposes. If you are considering a hard money loan, there are some useful facts to know first.
- Hard Money Loans Are Short Term. Most hard money loans carry 12-months terms. However, they can be extended to two to five years in some cases. But from your point of view, you should know that extending a short term hard money loan can be risky. So, make sure you plan ahead about the possible options to pay out the loan payments within the short-term period mentioned in the loan agreement.
- Lenders Are Most Concerned With the Property Value. Lenders will evaluate the value of the property in question. If the borrower has good equity, he or she may qualify. So, if you have good equity, you can be confident of getting hard money loans as per your short term requirements.
- Almost Any Property Type Can Qualify. Unlike some other real estate loans, hard money loans can be used with almost any property type. The most important factor is its value. You can do some work to improve the value of your property before applying for a considerable amount of hard money loan.
- They Are Offered By Private Lenders. Unlike conventional loans which may be offered by banks or credit unions.
- Hard Money Loans Can Work For Construction. The money doesn’t have to be for a real estate purchase. Projects like construction also qualify.
- They Are Available for Hard Financial Situations.The focus on equity means that borrowers may qualify when they wouldn’t for other loans. So, it is the loan to take as it can be comparatively easy to get hard money loans than some other options available.
- They Come With Relatively High Interest. The short term means lenders have less time to earn a profit.
- Hard Money Loans Can Move Quickly. One of the great advantages of hard money loans is that they are quick. If you want to take advantage of a time-sensitive opportunity, this may be the loan type for you.
- Loan-to-Value is Key. If you have plenty of equity or don’t need a huge principle amount, a hard money loan may be right for you.
- There Are Great Hard Money Lenders California Residents Can Pick From. If you think a hard money real estate loan is right for you, then all you need to do is choose the right lender for you.
Financial security should always be a priority to you and you must not take loans without knowing all the ins and outs about it. The more you learn about various loans options, their respective benefits and risks, the better financial decisions you will make. Some poor financial decisions can make you and your family suffers for a long time. The current trends toward bridge and estate loans offer you safe loan options.