If you’ve ever bought a home and didn’t qualify for traditional financing, you iliar with the terms « hard money loan » or « private money loan. »
How do hard money loans work?
The Federal Housing Administration (FHA) has been enjoying some of their busiest fiscal years, but getting an FHA-backed loan may not be enough. Many sellers prefer taking an all-cash offer to dealing with the challenges that sometimes arise when buyers offer with conventional or FHA loans.
For reasons like these, hard money loans, usually offered by private investors in exchange for a security interest in the property, have come back into style. Hard money lenders tend to take a different approach.
Hard money generally comes from individuals or groups of investors who lend money based primarily on the property being used as collateral. If anything goes wrong and you can’t repay, hard money lenders plan to get their money back by taking the collateral used for the loan and selling it. Generally, the value placed on the actual collateral is worth more than your financial position.
Hard money loans
Most homebuyers pursue a hard money loan because they either don’t qualify for a standard mortgage or they need money quickly.
The good news for hard money loans is, unlike traditional home loans, which can take several weeks to process, hard money loans can be ready in as few as a couple of days. Continue Reading Hard money loans: great option when buying a fixer upper
