There are many first time investors who are excited about the hard money lenders. But who are they? What is it actually? How are you supposed to take out such loans? Are you aware of the meaning of hard money? Well when money is discussed among the investors, they use the term “hard” and “soft”. While soft money is easier to qualify for, hard money loans are just the opposite. The borrowers find it extremely difficult to qualify for hard money loans as the terms are usually more specific and stringent. Mortgage loans are hard money loans and these loans are also known as private loans as the money comes from people like you and this is the reason the capital is taken care of by making the criteria tougher. If you’re aware of the hard money lending process, you should be aware of the entire process. Here are some most common questions about the entire financing option.
* What is the entire procedure of taking out hard money loans?
When it comes to taking out such loans, the investors can access the capital for their investment purpose and the fund will be received by them within 3 days of getting the final documents from the company. The hard money is usually lent for the collateralized loans on residential houses and other projects including commercial investment.
* For how long can the loan be taken out?
Such loans are lent for 2 months to 12 months but you should be aware that the longer loan you take out, the costs on the interest rates will also be higher.
* Will your credit score matter for taking out the loan?
Well, just as any lender will give a glance at your credit score before lending you the loan amount, the hard money lenders are not an exception. The lender will not only check the score but will also make sure whether or not the lender has any record of bankruptcies, foreclosures, collections or charge-offs. They will determine how much you’re capable of repaying the loan with ease. This kind of loan gives more importance to collateral and this means that the kind of property will be looked at by the lender before giving the cash.
* Will you require putting down money while taking out the loan?
Most often, the hard money lender will ask for a down payment and the reason behind this is that the lenders usually want to check your financial ability to complete the maintenance and also cover the loan costs and any other surprise costs that may arise with time. If you can’t pay for closing the loan, it’ll also be tough for you to take out such financing options.
* Can such loans be compared to non-owner occupied investor loans?
No the hard money loans can’t be compared with the non-owner occupied investor loans. The former are used for specific purposes like quick turnaround or after credit repair situations. Since the foreclosure market keeps on increasing, you’ll find the investors using the hard money loans as a way to make safe their property within a short span of time. Therefore, when you’re in the market to take out a mortgage loan you should consider the options of the hard money lenders. If you want to buy an expensive property and you need immediate cash, you can certainly take resort to the private money lent by the hard money lenders.