Previously, hard money was viewed as cold cash that belonged to private lenders who would lend to people who owned real property as security. However, the negativity surrounding hard money loans has disappeared.
Today, hard money loans serve as popular ways of getting short-term financing regardless of the borrowers’ credit scores and the state of their properties. Besides, private hard money lenders in Florida and other states function differently from conventional loan lenders. Since people have not yet understood how hard money loans and lenders work, this guide answers some of the frequently asked questions.
Hard money loans are loans offered by private lenders and not banks. These loans are given to borrowers based their property’s value rather than their tax returns or credit scores. In fact, hard money lenders don’t pay much attention to your income statements, unlike conventional lenders.
Residential hard money loans are bridge loans offered to investors who need cash to close swiftly. They are appropriate for cases of foreclosures and refinancing. You can also apply for a residential hard money loan if you want to acquire real estate.
Every investor wants to feel secure and it is usually a primary concern when dealing with loans. Hard money loans require the borrower to be secured by a property that has 30% to 50% equity. Therefore, investors are well protected.
Interest rates for hard money loans are high, but they offer you financing that protects you against bankruptcy. In fact, you can save your property or avert foreclosure by getting a residential hard money loan.
Having answered these questions, you can easily make an informed decision. After all, you have the information you need, and you know your options. Borrowers should ensure that they get favorable terms for hard money loans.