A hard money loan is a type of short-term loan that is secured by an asset, preferably real estate property. The loan amount that will be approved will be based primarily on the value of the property that will be used as security. The fund for this type of loan is provided by private investors through hard money bankers. A hard money banker is not the same as a conventional lender such as a bank or credit union. A hard money lender or banker is a private individual or a group of investors that offer their own funds. In some cases, the hard money lender may even be a licensed mortgage broker. The difference from conventional lenders is that hard money lenders offer their own money while traditional bankers lend money from the deposits made by their clients.
The term for a hard money loan is usually set at 12 months, although it can be extended to 24 or even 36 months, depending on the lender and the capability of the borrower to pay back the loan. A hard money loan is a good option for borrowers grappling with distressed financial issues such as foreclosures, bankruptcies, and high-interest asset-based loans. It is also a good choice for borrowers who need funding approved within a short period of time.
How Can Hard Money Lending Help Real Estate Entrepreneurs?
A hard money lender may be the best partner for a borrower who needs funding for investing in real estate. Some types of property investments, such as distressed properties or property flips, carry a higher risk, which makes conventional lenders hesitant.
The process involved in hard money lending is quicker. Depending on the type of asset that backs the loan, the application may be approved in just a matter of days or weeks. Traditional mortgages, on the other hand, can take at least a month to complete.
Another advantage that hard money lending can offer is that borrowers may receive more funding from lenders. Hard money loans may pay up to 100% of the property’s purchase price, depending on the lender and the value of the property. This provides the borrower more room to move due to better funding.
Hard money loans are also excellent for property investors who are just starting out, allowing them to purchase real estate with little personal funding. New investors can also build their credit history with this type of loan if they pay back the loan on time. Once a beginner investor has established him/herself, he/she may then secure a credit line from a traditional lender, such as a bank at a lower interest rate.
Types of Property That a Hard Money Loan Can Cover
A hard money loan can cover almost every type of real estate property, from land and residential to commercial and industrial. It is ideal for fix-and-flips and construction loans.
Where Can I Learn More About Hard Money Bankers?
The best way to find the right hard money lender/banker for your investing needs is to do your research. Look for a lender who offers or specializes in the type of loan you need for the specific real estate property you have.
If you are needing a lender in the Pennsylvania, New Jersey, Virginia, DC, or Maryland area than the team at Hard Money Bankers may be the right fit for you. Hard Money Bankers is a full service and self-funded hard money lending company. They provide fast and flexible financing for both residential and commercial real estate needs. Learn more about Hard Money Bankers and apply today by visiting their website, HardMoneyBankers.com.