What Is It?
Hard money loans are short-term loans to borrowers who are in the process of buying commercial or residential properties. The lenders do not use traditional qualification criteria to extend the loans to the borrowers.
Hard money or private money loans have less restrictions, and are generally easier to obtain. Soft money loans are those that are available from credit unions and banks.
The terms related to hard money loans vary from one lender to another as they each have their own requirements that need to be met. In most cases hard money lenders will provide a specific percentage of the property’s fair market value, purchase price or completed value, depending on if it is a purchase, rehab project or cash out refinance. If the borrower defaults on the loan, the money lender will take possession of the property.
It is important thatyou make sure to read the fine print of your contract with a hard money lender. You need to know exactly what is expected of you as this will enable you to choose the most appropriate form of loan for your particular needs.
The usual percentageof the after repair value of the property that the hard money lender will offer you is 60-65%. This is based on the value ofthe property after all the renovations and repairs have been completed. The main consideration to bear in mind regarding hard money loans is that the interest rates are normally higher than bank loans and there payment terms short. This should not be a problem if you need the financing for an investment property only. You should have done the renovations and resold the property before the loan is due to be settled. Discuss your particular requirements with hard money lenders Tampa to ensure thatyou obtain the most suitable deal for your purposes.