The economic times are really difficult and this is well illustrated by the tightening of purse strings by banks. Banks are developing very stringent lending terms to ensure that borrowers are thoroughly scrutinized. However, hard money lenders in Houston are moving fast to lender to borrowers who have been locked out by banks. These lenders are not large financial institutions rather they are simply investors who want to make a profit by providing borrowers with mortgages.
The hard money lenders through some brokers offer borrowers with high interest, short term loans. Borrowers with bad credit scores can also get the loans. Hard money lenders in Houston do not focus a lot on the credit score, their concern is more on the asset valuation and the loan to value ratio. Most lenders do not give more than seventy percent of the home’s value. Similarly the repayment period can be a few months.
Hard money lenders do not have any form of “red tape” in their operations. This compared with the bureaucracy that banks have in place ensures borrowers get their deals approved and closed within a few days from the time of the application. Individual hard money lenders in Houston are often matched with borrowers through brokers. The brokers earn a commission on each successfully concluded deal. The commission can be several thousand dollars.
Because the hard money loan is a short term loan facility the borrower can refinance the loan into a conventional mortgage to make it easier for him/her to repay. The borrower must position himself/herself to pay off the loan within the agreed time period. Another alternative is for the borrower to flip the property so that s/he can pay off the loan. If the two avenues fail to work for the borrower s/he can have the hard money loan extended.