Hard Money 101
Hard money loans, or private money loans, can sound intimidating. If you are interested in working with a hard money loan but are overwhelmed by the terminology, check out the following blog post on everything you to need to know about getting started with hard money loans.
What exactly is a hard money loan?
The first step in working with hard money loans is understanding them. A hard money loan is a short-term loan that is secured by real estate. The amount of money a hard money loan is worth is based on the property the borrower owns. These loans usually do not have to do with the borrower’s credit, just the value of their property. Hard money loans are funded by private investors and are used as an alternative to conventional bank or credit union loans. A hard money loan usually lasts for 12 months, but the terms of the loan can be extended to as long as two to five years. Hard money loans require monthly payments of interest or interest with some principal and a balloon payment at the end of the loan period.
What types of property qualify for hard money loans?
If a borrower is interested in a hard money loan, almost any type of property can be used to receive the loan. These property types include single-family residential homes, multi-family residential homes, commercial properties, land, and industrial properties. However, some hard money lenders do not work with residential properties or land loans. Many hard money lenders specialize in a certain type of property, so keep this in mind when working with hard money loans.
What type of deals should be made with hard money loans?
If a borrower needs money, they may use hard money loans as a short-term option. Usually, these types of loans are used when a buyer has credit issues when a real estate investor needs to act quickly, or for remodels, home repairs, land loans, or construction loans.
Now that you’ve read a quick crash course related to hard money loans, you’re ready to take the next step and reach out to Shop Commercial Mortgage. We work with commercial hard money loans and can help you with your borrowing needs. Learn more by reaching out to us by phone at 813-516-5210!