Hard Money Mortgage Lender
A hard money mortgage lender can be key in today’s economy. Now more than ever the real estate investor needs to have funding available that is not necessarily dependent on perfect credit. The financing will be only for a short term investment of real estate property. For the real estate investor, a hard money mortgage lender is usually their best option. Hard money loans are normally very short term loans that are made against real estate. These are loans that originate outside of the regular channels of conventional financing like banks. A hard money mortgage lender is usually a private individual or a small group of capital lenders. The hard money lender is often an individual that has done a lot of real estate investing and now wants to make his capital earn more money by investing in the projects of other real estate investors. Some of these lenders will use capital from their pension funds or IRA’s.
The term ‘hard money’ is usually considered another term for a ‘short term’ loan. These loans are often for less than a year and can even be for just a day or two depending on the investment property. Along with a hard money mortgage loan, there will be points and high interest rate charges. A point is usually one percent of the loan amount and is considered an additional fee or up-front charge with the interest rate falling between 12 percent and 18 percent annually. These are all variables that depend on the lender and the property. The points will also vary depending on the deal and will range between five and ten.
When a real estate investment will not qualify for traditional financing and the funding will be needed quickly, a hard money loan is the best and sometimes only option as long as there is good equity in the property. Usually the property is a really good deal for the borrower but they do not have quite enough cash or good enough credit to take advantage of the opportunity by using conventional funding. Sometimes even the primary residence homeowner will want to use hard money financing as a bridge so they can secure their property and will pay off the hard money loan in a few days when their traditional permanent financing comes through.
If you are looking for a hard money mortgage lender one good place to find them is through clubs for real estate investors. Investment groups can be found in most areas, even in the most remote places and these groups meet either weekly or once a month in order to do networking. The hard money lender usually can be found at these meetings or at least you will find investors who have connections with these types of lenders.