Hard Money Loan
A hard money loan is a type of loan that borrower receive cash fund by secured of parcel of real estate. The loan process of the loan is much faster than ordinary conventional bank loans, duration of loan process take about 2 days or 48 hours. Many investors preferable this loan rather than bank loans, cause priced property will sell quicker. The lenders lending the loan amount are based on the value of the asset, generally are no more than 65% of the asset.
Talk about term of the loan, it's vary from lender to lender. The amount lending ranged from $50,000 to millions, the loan term can be as short as 3 years with various upfront costs and charges. And the interest rate is typically higher than sub prime rate.
Hard money lender insist being in first-lien position, some of them may lend additional fund to borrower for remodeling projects upon request. You must understand the loan process and how it works when dealing with hard money lender.
Similar to other loan types, this loan has been undergone changes recently. Although the possibility of getting the loan is still large, but lenders now more concerned about borrower's credit rating. For those with FICO score above 620, chances of getting the loan will be higher.
Some documents required by lenders :-
- three months of bank statements for those is self-employed
- Two years of W-2 forms and/or income tax returns, and cash reserves of 5 to 10 percent of the value of the property.
Just a friendly reminder, borrow the exact amount you need. Do not get much fund for unnecessary uses. Be sure that the monthly installment still within your monthly overhead.
For more home loan information, please check out
Home Loan Guide instead of Hard Money Loan
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