Hard Money is Personal Cash Lending

Posted by Fred Lima | 1:23 PM | 0 comments »

By Robert Newton


Who knows the term hard money?

Hard money is private money lending, money you will receive from individuals which will loan you their cash against your real-estate, hard funds provider is the bank and the bank will Loan you their money and put a lien against your real-estate, the same with hard cash banks.

What is the difference between the hard cash lender's programs and the bank over the road?

1. Hard money banks can help financiers with sizeable loan amounts, while banks will make it awfully hard on the borrower to loan these massive amount, so that the loan would possibly finish up with an insurance firm to loan the money and the requirements are high.

2. Hard money banks can fund any hard money loan inside a week, while for the banks it'll take at least a month or perhaps more.

3. Hard money banks will ask for little paperwork, while the banks would ask for just about everything you have, taxes, income, assets, history of the property before and plans for after the purchase, business license, fundamentally they may definitely wish to see more from you to loan you some money.

4. Hard money lenders have tenets but they can make exceptions without processing it through a whole underwriting team- while the bank need to go through different departments and underwriters and processors just to make an exception, and then the exception won't get excepted.

As you see to get a tough cash loan is way easier then to qualify for a loan from a bank thanks to the whole process, the banks are big corporations and huge corporations have many different rules within their firms, and to get an exception for these rules is next to impossible, and that is why many backers would prefer to go with a hard bank.

So now you're probably thinking what is the catch with the hard money banks? OK, so let's rap about all the reasons why you should not consider making an application for a hard money loan:

1. Hard money banks for their services will charge you 4 to 9 points on the loan- while the banks will charge you only 1 to 2 points. Example: If you have got a loan quantity of $1,000,000 and your hard bank will charge you 5 points up front then you will pay $50,000- while the bank will charge you 2 p.c which is $20,000, that could be a bit difference but under different circumstances for some individuals it is still a great deal.

2. Licensed money lenders due to the fact that they will loan you money without showing your credit report and your revenue they are going to set the loans interest rate 9 percent-15 percent- while the banks will set your loans IR to 7 percent- 10 p.c, again that's a huge difference if you are considering it except for these folks that require the hard money loans it's still a great deal.

You have to understand that most speculators or house buyers can not qualified today with banks for any sort of Loan, hard money banks can get you the deals you want (repossessions, reo's) without even brooding about showing all the unnecessary documentation, all you need to have is some money in your pocket if you're purchasing, and if you are refinancing then you need enough equity since the hard cash lenders will probably go up to 65 p.c at the most, also to find good hard cash banks it is not so hard, it's actually extremely easy because there are numerous private hard money banks that are looking for real estate properties and notes to buy so that they can make their points up frond and naturally the high interest rate, if you will think about it, it's far better then put the money in the bank.

Example: If a hard bank put $1,000,000 in the bank and the bank will pay him 5 % a year- while if he will be able to loan the money to a speculator that want to get a property or to refinance a property, he is going to charge his 5 points and he is going to get 15 percent rate on his money, that's a big difference. Good luck to you all financiers out there.




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