Financial institutions are traditionally the basic lenders to real estate investors. However, recent lending regulations have tightened the terms of engagement, leading investors to look elsewhere.
Common Funding Prerequisites for Hard Money Lenders
Are you looking for a loan to finance your real estate project or business? If you have decided to go the hard money lending way, it is important to understand certain basic yet crucial requirements.
What is the Loan-to-Value (LTV) Ratio?
The loan-to-value (LTV) ratio is essentially used as a measure of the risk by financial institutions and other lenders when considering a loan. Loans with higher LTV ratios are higher risk and, in most cases, result in a loan that costs more for the borrower.
What is a Hard Money Loan Used For?
Hard money loans are commonly used in commercial and residential lending. The lender supplies the funds following strict guidelines. In this type of loan, you need plenty of cash as the loan term comes to an end.
6 Things You Didn’t Know About Hard Money Lenders
Most hard money lenders operate legally and are genuine. Today, almost all hard money lenders sincerely want to assist you grow your portfolio as opposed to taking advantage of you. The following are six top things you perhaps didn’t know about private lenders.
Differences Between Hard Money and Soft Money Loans
Start by learning the difference between hard money and soft money lenders. While both hard and soft money loans can be profitable, the repayment interests, terms of engagement and duration of loans are different.
Advantages of Borrowing From Hard Money Lenders
Many real estate investors say that hard money loans are expensive. While this may be true, the option remains a great way for people to obtain finances when they have poor credit scores. However you choose to look at it, hard money loans have their place in real estate investment financing.
What Are Hard Money Loan Points?
A hard money lender gives you money and in return, they charge you some fees. These fees are known as hard money loan points. Basically, they are the lender’s upfront costs or cash flow.