Hard Money LendersHow do they differ from traditional banks?
Often when individuals need more money than they have on hand, their first thought is to get a loan from their local bank branch. They picture sitting down with a bank manager, explaining their need, undergoing a thorough credit check and either being accepted or denied based on their credit worthiness and their history with the bank. If the borrower is denied, he or she may think that's the end of the line.
What many of these denied borrowers do not know is that there is an alternative for select individuals; hard money loans are available to those with a certain type of collateral. These asset-based loans are available from private individuals and companies rather than banks, and they can offer the flexibility that traditional banks can only hope to achieve.
These hard money lenders can be everything from private individuals to mortgage companies or small business administration lenders and even some federal banks. They don't have to meet the many guidelines that FDIC insured banks do, and thus are able to work around many of the restrictions placed on traditional banks by state and federal government. That means they are able to work with the borrower in a way that traditional banks might not be able to.
Hard money loans are based on the value of real estate, either raw land, commercial or residential properties. The money provided is often used to renovate or repair that same collateral property and usually represents between 65-70% of the property's after repaired value.
This means that a property that is currently valued at only $65,000 can be used as collateral on a $65,000 loan if the property will be valued at $100,000 after it is fully repaired and renovated. This convenience is almost unheard of when it comes to even fully secured loans from traditional banks.
Of course, it is important to find a reputable and experienced hard money lender. These can be national mortgage companies that specialize in hard money loans or even private individuals who specialize in asset-based loans.
Some companies even provide special services to improve your chances of getting the loan and with the most favorable terms. These are entities with a vast network of hard money lenders at their disposal. This just might be your best bet, as they can help you present the ideal package to potential lenders, which can get potentially you the best loan possible.
If you're looking for hard money loans, our team can help. Just fill out our Hard Money Guide Contact Form and one of our experts will contact you as soon as possible.