Hard money loan

If you need a loan for a commercial or residential real estate project, you may think your credit score means you cannot get the right approval. For many people who do not have great credit, hard money lenders can be of some help. Hard money loans can offer a way for these people to get the loans they need.

  1. Start by finding a reputable hard money lenders. While there are a lot of reputable hard money lenders out there, there are also people and companies that try to make themselves look like they are respectable private hard money lenders but are actually loan sharks and other scam artists. You need to research several hard money lenders and not just go with the first company that offers you the money you need in the time frame you need it in. You should talk to a few and do some real research into all of them to get the loan you want from a reputable source.
  2. Try to go with a local lender. Many hard money lenders operate on a national level but it can be a better experience if you can meet with someone with the company in person. Some hard money lenders like to be able to see the property you are trying to buy before they give the loans you need to make the purchase go through.
  3. Decide if this is the right thing for you. Hard money loans are not meant to be long term loans. They were created to be investments that are only one year or even less. Look into your options for refinancing your hard money loan during the time frame that you have. There are benefits and drawbacks to hard money loans. You need to look carefully at your finances and decide if this is the best thing for you to do. The interest rates that are associated with hard money loans are higher than other kinds of loans. They can be anywhere from 15 to 18% higher. You need to factor in the fees and closing costs. This is a big decision and you need to really spend some time before you start talking to hard money lenders.
  4. Look at your timing for your loan. While the upfront costs may be larger and the interest rates are bigger, one big benefit to hard money loans is that you should be able to get the money a lot faster than when you are dealing with traditional loans and mortgages. Banks have a lot of rules and regulations that they have to comply with. Private hard money lenders do not have these rules and regulations and can lend to anyone they want. If you have a real estate deal that you need to jump on quickly, a hard money loan may be a better way for you to go.
  5. Put together your proposal with the value of the property you want to buy. When hard money lenders look at your proposal for a loan, they are not judging you on your credit score. Hard money lenders want to see how much the property you want to buy is worth and what your specific plans are for that property. The more specific the details you can provide, the better the chances are that you will be successful in getting your hard money loan. If you have proposals from contractors and others who will work on your property, you should include them in the proposal you supply to hard money lenders. You need to provide supporting documents to show the value of the property.
  6. Make sure you protect your legal interests. Before you sign any documents for any kind of lender, this is true for hard money lenders and banks, you need to have all paperwork looked over by a lawyer who is on your side. There can be grave consequences for signing something without the help of an attorney and that you may not understand. You need to be sure that you are clear on the terms and the conditions of your loan before you sign anything. This is just common sense to protect yourself.

With some work, you can get the right hard money loan for your situation.