How do Hard Money Loans Work?
A hard money loan is funded by private investors for a term of about 12 months. Sometimes the term can be extended to 2-5 years. The amount of money the borrower can receive from the lender depends on the value of the property rather than the borrowers’ credit.
A hard money loan is a good option when you need a loan for a short period or when you are not ready to go through a lengthy and tedious procedure required by banks. Hard money loans are perfect for the following situations:
Real Estate Hard Money Loans
Perfect for borrowers with a poor credit score and are unable to get a loan from a bank. If they have enough equity in their real property, then a hard money lender is interested in making a loan to such borrower.
Hard Money Loan Refinance
- Lower Your Payments
- Pay off Your Loan Faster
- Cash-Out Refinance
- ARM to Fixed Refinance
Fix and Flip Loans
This type of loan helps to purchase a property for renovation before turning it into a profit. Usually, investors buy, renovate, and sell a property within one year. Typically these loans are used to finance properties that are in poor condition. Fix and flip hard money loan is perfect both for experienced home flippers and for novices.
Banks are not willing to provide construction loans because this is too risky. Hard money lenders can take this risk if the borrower fits the lending requirements and if this transaction will be profitable to the lender.