Hard Money Loan

               A hard money loan is a short-term loan that is usually used to fund one house while you are working on another one. They usually last from six months to three years and must be paid in full at their maturity. You must have some asset that can be used as collateral for the loan.

               The loans are usually used for people who flip homes and are in need of a short-term loan to fund the buying of a house. They are also used by businesses when they are trying to acquire new businesses. They are not that difficult to get but you need to have an asset that will cover the loan in case you default on it.

               You need to find a lender that can help you with these types of loans. You should put hard money loan lender in your search engine to find a lender near you. Make sure that you do research on the company before you choose them because you don't want to be scammed.

               This article will give you some information about hard money loans. It will give you some facts that you should know. You can also do more research to find the information that you are seeking.

Hard Money Loans

1. Short-Term Loan – A hard money loan is a short-term loan that lasts from six months to three years: https://www.amres.com/amres-resources/what-is-hard-money-lending. If you need a large amount of capital in a short amount of time, a hard money loan is what you are looking for. This is used when traditional loans don't work for various reasons including personal credit score or cash assets. These loans are usually used for people who are flipping homes with the intention of selling the home soon after it is renovated. 

2. What They Are Used For – These are usually used for real estate investment projects and have real estate to secure them. This means that if the investor defaults on the loan, the real estate can be seized. That is why they are usually used by borrowers who are flipping houses. They are also good for businesses that are acquiring new buildings that may be sold soon afterwards. 

3. Secured by Property – Again, the loans are secured by the property that is the cash is being used for. The borrower credit score or cash assets don't come into play because of this. This makes it easier for the borrower to qualify for it and to get the cash they need to purchase a new home. Remember that these are not traditional homes that can get traditional funding. 

4. They are More Expensive – They are more expensive because they involve a higher risk to the lenders. The terms can be more flexible, however, because of the nature of the loan. They are perfect for borrowers who need a lot of cash in a short amount of time. Just remember that you will be paying more for the privilege of getting the cash in a short amount of time. 

5. Lenders Will Charge Points – Hard money lenders will charge points for the advance. Points are a percentage of the loan that is paid up front. These points are used to cover administrative fees, or they can be used to compensate the lender for the bigger risk. Points are a common thing that you will find, even in traditional funding for homes. 

6. Personal Guarantee – Lenders will often ask for a personal guarantee so that they get paid back even if the house doesn't get sold. The borrower will agree to pay the loan back with their personal assets in case that happens. If the borrower has bad credit, this is when they will need to provide a personal guarantee. They will also have to provide this if they have few cash assets from their business. 

7. They are Not Regulated the Same as Traditional Loans – Hard money loans are not regulated the same as traditional loans. Because of this, you need to especially careful so that you aren't scammed by an unscrupulous lender. Read all online reviews and check the Better Business Bureau. See here to learn more about the regulations on hard money loans. 

8. Good if You Need Money Quick – If you need the cash within a couple of weeks rather than a month or so, a hard money loan is the way to go. If you work with an experienced lender, you can get the cash even faster. They can often get the money to you in as little as a week. Remember, though, this is not a traditional advance, and it has different requirements. 

9. Have an Exit Strategy – You should know how you will pay back the loan before you even apply. If the home doesn't sell as quickly as you think it might, you need to think about how you will pay it back. If you don't have an exit strategy, you could lose some of your personal assets. 

10. Work with an Experienced Lender – Again, you need to make sure that you work with an experienced hard money lender so that you get the service that you are expecting. Read all online reviews and check on the lenders' reputation. You need to have an experienced lender in your corner when you are needing cash quickly. 

Conclusion

               There are many things that you need to know about hard cash loans. They are not the same as a traditional loan, and they don’t have the same regulations. You need to research all information that you can before you choose a lender. Make sure that they are legitimate lenders with a reputable business.

               If you are buying a home with no intention of selling it soon, these loans are not for you. You need to investigate traditional loans for this purpose. These loans are meant for people who are flipping homes and intend to sell the home as soon as they renovate it. Be sure that you are using the right type for your individual situation.