A hard money loan is a specific type of asset based loan financing through which a borrower receives funds secured by real property.
Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.
Most hard money loans are used for projects lasting from a few months to a few years. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers.
The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.
Hard money loans are a type of real estate loan that is provided by private investors, through brokers. The collateral for this type of loan is the value of the property. In the case of a construction loan it is the improved value of the property.
In order to provide security to the lender, the hard money loan will have higher interest rates than a conventional loan, and will be limited to around 65% of the improved value of the property.
The lender will also only lend from the first position, so that in the event of a foreclosure, they are the first party to recover their investment.
Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.
Most hard money loans are used for projects lasting from a few months to a few years. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers.
The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.
Hard money loans are a type of real estate loan that is provided by private investors, through brokers. The collateral for this type of loan is the value of the property. In the case of a construction loan it is the improved value of the property.
In order to provide security to the lender, the hard money loan will have higher interest rates than a conventional loan, and will be limited to around 65% of the improved value of the property.
The lender will also only lend from the first position, so that in the event of a foreclosure, they are the first party to recover their investment.
from Real Estate Investing Tips - LM2 Investment Group - Blog http://ift.tt/1TcLuQ0
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