Hard Money Loan For Your Real Estate

| March 19, 2015 | 0 Comments

Caught in a bad financial situation and want some quick cash, hard money loans are the way to get it if your property is of good equity value. Such loans are provided with the property as collateral and are available even to people with bad credit score.

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Loan Structure And Features

These loans are based solely on the market value of the property. Lenders value the property and offer up to 70% of the value as loan and have the right as the first creditor in order to recover their money. These short-term loans come at a high rate of interest and must be used prudently. The lenders value the property on current price and factor in the future value of it to safeguard their interest. The biggest catch to it is that, upon defaulting, the home is put up for sale within one or four months. While many people avail these loans to protect their property, the rate of losing their property as a result of these loans is very high.

The lenders are private individuals who use their surplus cash to make a killing through high interest rates. It is not very regulated and the rights of the borrower are not safeguarded at all. It is best to get such loans through personal contacts so that there is room for some negotiations; it works better than dealing with loan sharks.

Apart from residential properties, these loans are available for commercial real estate as well. These loans are way different from mortgage and are not at all regulated. But they still have a good market, as it is quick and hassle free to get it.

 

Hard Money Loans For Brokers

Fewer individuals take such loans to meet their financial contingency but it is a common practice for real estate agents to use it. These are also known as bridge loans, to finance properties that are still not ready for other financing options. A classic example is when a broker finds a property that has a bright immediate future, but needs some repairs or renovation. A hard money loan then comes in handy. This short-term loan can be used to do the necessary repairs and the house can be put up for sale. Once sold with a good profit margin, the loan is easily repaid. Real estate agents who have the relevant experience and understand the trends in the business can make use of such loans to their benefit. This is possible for commercial properties as well; the only thing is that the risk involved is much higher. Brokers even take the risk of using such loans even if it is non-owner occupied, yet see a future market in it. Funding for such commercial properties is available from a better-regulated network of lenders, organizations that have money reserves to lend. They use their discretion while offering such funding taking into consideration the value of the property and marketability.

Whatever be the kind of property that is being funded by hard money loans, these run a high risk of default rate. The only option left for property owners in such a scenario is to sell the property. This is one of the main reasons that such loans should be left as the last option.

To know more, please visit: http://www.val-chris.com – 2601 Main Street #400, Irvine, CA 92614, United States, Phone – (949) 252-8020

Category: Home Loan

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