Hard Money Loan FAQ in Hawaii

Hard Money Loan FAQ in Hawaii

Get answers to your questions about Hard Money Loans


 
Hard money lenders are investors who make loans that are secured by real estate. These lenders, which may be companies or individuals, usually charge higher interest rates than banks and credit unions, but they make loans that a bank would not make.
Private loans can be funded by individuals or funds that aggregate capital from many investors. A trust deed investor is one who invests directly in one loan, many of whom invest in bridge loans.
Even investors or developers who have access to bank loans often choose to use private money, including when a bank cannot meet a closing deadline, cash offers better opportunities, the investment opportunity does not qualify for a bank loan or the investor needs a larger loan than the bank will provide.
Hard money loans offer many advantages. The application and underwriting process is much faster, and there is less scrutiny on the borrower's personal situation, including credit and income. Borrowers can take advantage of opportunities that have a short deadline or make a strong offer in cash. Self-employed borrowers can qualify for a private loan as well.
Hard money lenders will lend for residential and commercial real estate, although most do not lend on owner-occupied homes.
You will need to describe the nature of your project and be prepared to provide any crucial deadlines and dates, the property address, whether the loan is for acquisition or refinance, the purchase price, the renovation budget, and the intended asking price once renovated.
In some cases, the loan must be personally guaranteed by the borrower. It is not always necessary, as no-recourse loans can be based on the borrower's history and the project itself.
Trust deed investing is investing in real estate-backed loans. Most investments are short term loans that mature in under 5 years and made to professional real estate investors. Trust deed investors are one source of capital for private money loans.

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