How A Hard Money Loan Can Work For You
We all know that sometimes real estate isn’t as liquid as you may expect, and if you are looking for funding for a quick project or short-term project, then you’ve heard about hard money loans. But maybe and you are wondering what is all about.
Well, in this post we will tell you all you need to know about hard money loans:
What Is Hard Money Loans?
Hard money loan is an interest-only loan which can be borrowed for a short-term ( for a few months year to 3 years) for investment properties. It is important to note that the amount you get for your hard money loan isn’t dependent on your creditworthiness. However, it is dependent on these loans are backed by the property’s value. This means the borrower can use only their property as their only collateral, and nothing else.
Hard Money Loans Vs Traditional Loans:
Compared to a traditional loan, the loan to value ratio of hard money loans is low. What this means is that if you have a property valued at $200,000, the lender won’t give you a loan which is 70, or 80, 0r 90% of the value of your property. However, they will lend you 50% or lower of the total value of your property. Because the lender wouldn’t do any risk assessment of the property; they only base their return on the property’s value.
Also, hard money loans have very high-interest due to their short-term nature. They usually have higher interest rates than a traditional amortized mortgage.
However, borrowers love these loans because they allow them to make a quick purchase of properties they may not afford and give the borrower some leverage. For example, if you have a free and clear house and want some quick money, you can apply for a hard money loan from us at California Hard Money Direct.
When Is A Hard Loan Necessary?
Here are some instances where a hard money loan might be a good idea:
- If you are looking to fix and flip a property.
- When you are looking to buy and hold.
- Construction financing
- Building a resort.
- If you have a bad credit score and you need a loan.
- If you need quick cash to fund a short term project or an immediate project.
Key Take-Aways On Hard Money Loans:
- Properties only back hard money loans.
- They have a higher interest rate than traditional loans,
- They have a low LTV ( Loan-to-Value Ratio) than conventional loans.
- They have a duration of 3 months to 48 months.
Looking For A Hard Money Loans?
Well, look no further, at California Hard Money Direct, we offer the following hard money loans:
- Bridge loans
- 2nd Mortgage loans
- Fix and flip loans
- Estate loans
- and many more.
Give us a call, and we will be at your service.