Hard Money Lenders

If you want to buy your next piece of real estate – whether it’s a commercial or residential investment – and you don’t have the ability to borrow from a traditional bank or mortgage company, a hard money lender could be the best financing option.

Hard money loans, also sometimes called bridge loans, are typically offered by individual investors or hard money lending companies who pool investors’ money. The value of the real estate secures the loan.

If you can’t qualify for a bank loan or a mortgage because of bad credit, lack of income, or some other mitigating factor, you can turn to a hard money lender. Hard money lenders focus more on the value of the property you’re borrowing against than on your ability to repay the loan, and they’re quicker to foreclose on a property than a traditional lender.

Following are some of the characteristics of hard money lending for real estate investing:

• shorter loan durations (hard money loans are typically for 1-3 years)
• higher interest rates
• lower loan to value ratios (LTVs)
• hard money lenders always want to be in the first lien position
• points are higher (typically 3-6 points on the average hard money loan, versus 1-3 points for a traditional loan)

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