Hard Money Loans
Hard money loan, also known as bridge loan is often regarded as the last resort and is sealed by real property. This loan is essentially used in transactions for real estate. Lenders, in this case, are usually companies or individuals but not banks. One of the best companies for this type of loan is the Commercial Real Estate Loan Pros of Gainesville.
Key facts about Hard Money Loans
This loan is primarily used as a quick way to raise money with more cost but a low LTV ratio. Disbursing the funds takes a short period as the loan depends on collateral and not the borrower’s financial state. A hard money loan is money usually from a company or an individual but not from a bank and is utilized for real estate transactions. If the loan defaults, the lender may still profit from the agreement by taking ownership of the collateral. The lender and the borrower can negotiate the terms and conditions of the loan until they agree.
How Hard Money Loans work
This type of loan is hazardous compared to other types of loans. Due to this nature, banks do not facilitate this loan. Lenders of this type of loan are mainly companies or individuals as they do not look at the borrower’s financial state but the collateral value. Generally, hard money loans are viewed as an investment opportunity. Most individuals practice this as a mode of business. The loan is usually for a short period, most being between one and three years. You may get a hard money loan if you plan to renovate a building to mark profit once it is sold.
Special considerations for Hard Money Loans
The repayment schedule of hard money loans can be flexible according to the borrower’s agreement with the lender. Approval times are relatively shorter than loans coming from banks as the lender only looks at the property’s value, but the interest rates are relatively high. This loan is primarily used for short-term financing by borrowers having poor credit scores.
Benefits of Hard Money Loans
The approval process is faster than other loans like mortgages as the lender decides faster on the loan amount according to the equity of the collateral the borrower has. If the borrower has been in business with the lender, the loan process tends to be shorter and much quicker as the lender does not scrutinize the borrower’s financial documents. Lenders do not necessarily require the borrower to pay back the loan. They may have a more significant opportunity to sell the borrower’s property and earn back more than the loan amount when the loan defaults.
Disadvantages of Hard Money Loans
Hard money loans generally have low LTV ratios than other loans, e.g., from a bank, because the property is always the only protection if the loan defaults. Interest rates are higher compared to other traditional loans having an interest rate of about 11.3%. In conclusion, if you require any assistance regarding this type of loan, please contact Commercial Real Estate Loan Pros of Gainesville.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.