A hard money mortgage refinance loan is one that is offered by an investment firm or by a private investor. This type of loan should be viewed as a short term option. It is extremely useful in cases of foreclosure when you do not want to lose your home.
The loans are normally available very quickly and if you are facing foreclosure, you do not always have sufficient time to obtain a traditional loan. The short approval time will give you the opportunity to stop the auction of your home and give you time to consider your options.
Rates and Repayment of Hard Money Mortgage
The interest rates that are normally charged on this type of loan are higher than conventional lending institutions. The repayment period is also shorter, but if you are in a situation where you need a quick closing, this may be your only option. You may already have tried to obtain a refinancing loan from other traditional institutions, but to no avail. This leaves you with the only option where you know you will get a loan – hard money lenders.
You will be able to borrow an amount equivalent to about 65% of your investment properties market value. This means that if your home is valued at $300,000, you should be able to obtain at least $195,000
Prior to entering into a hard money mortgage, it is advisable that you are aware of the terms and conditions relating to the contract. Ensure that you know what is expected of you and that you know exactly what type of loan agreement you are signing. A hard money loan is usually the quickest and only option for investors that need a quick closing.