Hard Money Loans are also known as Bridge loans, Asset Based loans, and Equity based loans.
They are used as short term loans to purchase real estate or refi real estate when the borrower needs the deal done quickly and the plan is to refi or sell the property in a short period of time.
They are used when a person's credit is not up to par, and the borrower plans to fix his/her credit in a year or two.
Points on a hard money loan are traditionally 1 to 3 more than a traditional loan, which would amount to 3 to 6 points on the average hard loan.
It is very common for a commercial hard money loan to be upwards of four points, and as high as 10 points. There are as many reasons a borrower would pay rates this high as there are borrowers. Almost all reasons have something to do with the speed or lack of credit requirements that are beneficial characteristics of most hard money loans.
Sometimes there is an opportunity to purchase a property at a profitable discount if the buyer can raise the cash quick enough.
They are used as short term loans to purchase real estate or refi real estate when the borrower needs the deal done quickly and the plan is to refi or sell the property in a short period of time.
They are used when a person's credit is not up to par, and the borrower plans to fix his/her credit in a year or two.
Points on a hard money loan are traditionally 1 to 3 more than a traditional loan, which would amount to 3 to 6 points on the average hard loan.
It is very common for a commercial hard money loan to be upwards of four points, and as high as 10 points. There are as many reasons a borrower would pay rates this high as there are borrowers. Almost all reasons have something to do with the speed or lack of credit requirements that are beneficial characteristics of most hard money loans.
Sometimes there is an opportunity to purchase a property at a profitable discount if the buyer can raise the cash quick enough.
Sometimes personal or business needs require cash quickly or money is needed by a borrower who not otherwise would be able to get funds due to his credit or existing debt not qualifying him for a conventional mortgage.
Term of loan: hard money loans are typically of a shorter term than conventional loans, although you can find terms of up to 10 years depending on the lender.
Because of the shorter term, borrower should ensure that they have the resources necessary to pay off the loan when it becomes due.
from Real Estate Investing Tips - LM2 Investment Group - Blog http://ift.tt/1Gchryx
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