The Ups and Downs of Borrowing Residential Hard Money
A residential hard money loan is a type of non-traditional financing wherein a borrower get funds according to the value of the property that he or she wishes to buy. No one exactly knows why the word “hard” is attached to this type of financing. Some say it is because of the difficulties a borrower must endure to secure a loan, while others claimed that it is because hard money lending is a financing made against “hard” assets. Whatever the case may be, hard money is extremely useful especially if conventional loans do not fit the borrower’s lending needs. Hard money loans are primarily asset-based and lenders are not interested if you, the borrower, has a good credit history or not. Residential hard money is not also dependent on the criteria set by traditional lenders such as banks, mortgage companies, and credit unions. Even if you can’t produce a verifiable source of income, tax returns, and other financial documents needed to process a conventional loan, you can still obtain the financing that you need. Aside from buying residential properties, hard money can also be used for acquisition of a new house and for real estate development, as well as for refinancing. Because hard money lenders can approve a loan application in a day or two, hard money loans can also be used to pay off a debt, to settle a mortgage, and to prevent foreclosure. A drawback of hard money lending, however, is that if offers high interest rates. Interest rates often fall within the 12% to 18% range, which are considerably higher than the rates imposed by banks and mortgage companies. Hard money also has low loan-to-value ratios, or LTV. If you use this type of financing, you’ll probably get about 65% to 70% of the value of the residential property that you want to buy. Obtaining residential hard money can also be quite expensive for the average borrower. Aside from the high interest rates, hard money lenders ask for origination fees before they can process your loan application. In addition, lending terms may vary from one lender to another. Before you make a hard money loan, weigh your options carefully. Meanwhile, if you want to learn more about hard money lending, visit www.RehabHardMoney.com. Disclaimer: Article submitters are solely responsible for the content of their articles. ArtiLib can't be held liable for the contents of the articles. Report Abuse | Browse By Category |
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