Sunday, January 7, 2018

Hard Facts about Hard Money

By Houtan Hormozian www.fullcirclehousing.com What is hard money? Mortgage originators often get this question from prospective clients when discussing potential financing options for the real-estate purchase. In recent years, the term "hard money" has changed in meaning somewhat. Prior to the subprime mortgage crisis, hard money meant just that: cold, hard cash. Essentially, it was money that belonged to a private investor that was loaned to an individual using real property as security for the loan. As the years passed, so has the negativity surrounding the term. Hard money is again considered a useful tool to be leveraged when attempting to secure financing for investment and other types of properties. Hard money loans are often offered to borrowers who are enduring circumstances that make conventional loans difficult or impossible to use. Often, hard money is the best option for borrowers who are in a time crunch, because the turnaround time from application to funding is much quicker for hard money loans than traditional loans. As with all things, however, nothing comes for free. Hard money lenders are willing to extend financing to borrowers who do not qualify for conventional loans, which makes their investment inherently riskier. To account for this risk, hard money lenders charge interest rates that are often much higher than those of conventional loans. An originator's clients will need to understand this up front. In addition, hard money lenders are more interested in the value of the property than the credit profile of the borrower, which places much more scrutiny on the property. Hard money lenders often are much more conservative when placing a value on a subject property than a conventional lender. Another factor that originators must consider before suggesting hard money loans to their borrowers is the repayment time frame. Where conventional loans have terms of 15 years to 30 years, generally, the loan terms on hard money loans usually last no more than a few years Click on link below if you need a loan... http://application.fullcirclehousing.com