Welcome to the world of finance! You must be here because you are looking for a loan. We are a hard money lending company located in Sunny South Florida!
So what exactly is a hard money loan?
Well, a hard money loan is a loan backed by a “hard” asset, something like a tangible property that produces a profit to repay the loan quickly.
What makes it different from a mortgage you ask?
A normal mortgage is secured by the value of the home and backed by the borrowers’ ability to repay the loan in monthly installments where a hard money loan are forms of private loans. The funding is provided by private lenders as opposed to the government-regulated financial institutions.
The difference is in the loan terms, the approval process, and the purpose of the loan.
Who exactly uses a hard money loan and why would you need one?
Hard money financing is used by real estate investors who need short-term funding for an investment deal. Good deals go fast and as the old tale tells, cash sells fast. Hard money loans are used typically for one of two short-term purposes: the finance fix-and-flip deals where the goal is to get your money back and repay the loan and to bridge the gap between an investment property purchase and longer-term financing.
Hard money loans have typically become the go-to for house flippers who can’t or don’t want to borrow from a bank. Typically their credit isn’t great or because the deal doesn’t pass a traditional lender’s strict guidelines. With that being said the borrower’s cost of hard money, the interest fee, is higher for these reasons.
How are money loans different than traditional loans?
There are several differences between the two; hard money loans have terms of 6 – 18 months where traditional loans are typically for over 30 years. Hard money loans usually carry an interest rate that’s 4% to 10% higher than traditional loans. As well as, hard money loans are intended for short term investors where traditional loans are for owner-occupied properties, and hard money loans are backed only by property as collateral, while traditional loans are backed by the property and the borrower’s credit.