Hard Money Loans are mortgages from private investors and companies that will lend to you for refinance or purchase the real estate.
What is Commercial Hard Money?
Commercial Hard Money could be defined as a sub class of hard money. But there is one essential difference: lenders charge some higher interest rate for a commercial loaning of hard money than they do for the regular hard money loans. Commercial hard money lenders have to do this with the only purpose to protect them and their money from high risk involved. As usual, commercial hard money loans are taken for a short time period and they are taken strictly for business use. Hard money commercial lenders are not as protected as any other products of a consumer loan.
Commercial hard money loans could be given to a business enterprise. They could also be given to the individuals but there is one essential requirement that he or she is getting the loan on behalf of some business corporation or entity. Generally there are the following institutions where you can get the hard money commercial loan:
• Federal Banks
• SBA Lenders
• Private individuals
• Mortgage Companies
The hard money commercial lenders have absolutely different degrees of advantages and varying disadvantages in the proposed conditions for loaning hard money commercial (as the competitiveness of a loan rate).
While usual hard money lenders are giving loans for the purchase of a house or some residential property, today many companies are coming up with means and ways with which they are creatively designing a loan in order to make it possible for people to buy commercial land or property as well.Typically the hard money commercial loan’s interest rate is higher and it is around 12% – 18% and in the most of cases the loan is an actual mortgage. There also is the balloon payment due after one or two years.
These loans could be characterized by their relatively lower loan to value ratio and by their higher fee. So together with the interest rate, there also is a fee which can consist about up to 8% of the amount of the loan. The hard money commercial lenders are trying to keep their loans safe and because of this reason they need to be sure that the recipient of a loan has the sufficient equity in the house. So in the case of default the hard money commercial lender could sell the real estate property to recover their loans.