Many real estate investors hear terms that they don’t understand in the beginning, here is one such term- ‘Hard Money Loan’. What does everybody mean by ‘hard money’?
Hard money lenders are individuals or small groups, who lend (hard) money based on property you are buying and not on your credit score. If you cannot manage to boost your credit score before applying for home loan, then these hard money lenders come to your rescue. However, these loans cost (percentage-wise) much more than your regular mortgage, plus high organization fees. A hard money loan might be an appropriate option if you don’t have a high credit score to secure a loan from the bank.
A hard money loan is simply a short term loan secured by real estate. The loan requires monthly payments of interest and small principal amount, with a balloon payment at the end of the term. The amount of hard money loan that is lent is based on the evaluation of the value of the subject’s property. If the bank say’s “no” the hard money lender may still say “yes”. [Read more…]