If your application for a mortgage has been turned down by a traditional lender, bank or credit union, you may be left with one option - a hard money loan, also known as a private money loan. Residential hard money refers to a non-bankable loan on a residential property. The lender is not a bank or financial institution, but rather an individual or company who invests money in the loan.
A hard money loan usually takes the place of a first mortgage. Your credit is not as important with a private money mortgage, as the lender will look to the property as security for the loan. Hard money lenders typically charge interest rates much higher than traditional lenders and the down payment requirement may be higher. The home will also require a careful appraisal.
Hard money loans have many advantages, and for many potential home buyers and investors, they may be the only option. Hard money lenders work with borrowers who cannot obtain financing anywhere else.
There are many types of hard money loans available, including construction loans, fix and flip loans, bridge loans, commercial loans and distressed property loans. No matter what type of project you have it mind, there is a loan type available that is customized to your needs.
Hard money loans are easier to qualify for than traditional bank loans. This means you can be approved if you are self-employed or have income that is not steady, as the loans are focused on the property, not the borrower. In most cases, hard money loans are geared toward fixer uppers, particularly homes that require major work and do not qualify for a bank loan. If you are looking for fast approval and funding, a private loan is the solution you are looking for.
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