So, you really need a loan and, in your ventures, to find one, you come across the term hard money lenders Florida. How does it sound? In this short and sweet guide, you are going to learn everything you need to about hard money loans.
But first things first, what is a hard money loan?
Simply put, a hard money loan is a short loan you get and secure by real estate. Unlike conventional lenders like banks and credit unions, these are funded by fund investors, also called private investors.
The terms and conditions for hard money loans depend on a variety of things and could be anything from 12 months to 5 years. And like any other loan, you then get to pay these with monthly interest.
The amount you get to borrow will depend on the value of the property you are putting up as collateral. You could already be the owner or be in the process of acquiring it. Unlike other forms of loan, you don’t need a certain level of credit score. All that matters to hard money lenders is the value of the property.
So if you can’t get a loan from the bank because of a poor credit score then you can definitely get one from hard money lenders, as long as you have a property with sufficient equity to be collateral.
Types of Property for Hard Money Loans
Hard money lenders almost always accept just any kind of property. It may be a multi-family residential, industrial, single-family residential, commercial, or even land. However, a few private lenders only specialize in a single type of property.
Others specialize in multiple properties. This may be residential property and not land properties or the other way round. The main reason for this is the simple fact that they do not have any knowledge and experience on some type of property.
So, one of the important questions to ask when approaching a hard money lender or firm is if they have a niche and what type of property loaning they accept, if they do. This will let you know if you are eligible to take the loan.
Who are Hard Money Loans for?
As long as you are eligible then anyone can take a hard money loan. They are especially great for fix and flips, land loans, when you have credit issues, when you need a fast loan, as well as for construction loans.
Real estate investors especially, choose hard money loans for various reasons. One of the main reasons is that the loans are funded quickly and there are no long procedures to wait upon. While you have to wait for at least 30 to 45 days for a bank to grant you a loan, hard money lenders are able to fund your loan as soon as within a week.
The process only takes a day or two, and if you are lucky, you can even get the loan within the first and the second day of the process.
There are many things that go into how much interest you are going to be charged. It also may vary from one region or state to another, lender to lender, and of course, the loan funded. If competition is high in a specific place, the interests decrease.
Compared to conventional loans, there is a huge risk for hard money lenders, and because of this; hard money loans seem to have higher interest than banks. The interest and point rates also vary significantly depending on the loan to value ratio.
Hard money loans are truly a lifesaver and as long as you are working with reputable hard money lenders, you can be confident with them. The interests may seem high and scary in the beginning but the benefits of getting the loan within a week or a day and obtaining financing all banks have said no to, are all worth it.