Many people think of hard money lenders as loan sharks, which are those types of people who will break your kneecap if you don’t pay on time. In reality, however, these lenders are legitimate individuals or organizations that help people get hold of home loans as quickly as possible. Very simply put, a hard money lender is a private rather than a traditional lender, meaning that this is not a bank. Why Opt for Hard Money Loans Many people wonder why anyone would go to a hard money lender instead of a bank. The answer to that is “convenience”. A hard money loan may have huge interest rates and run over short periods of time only, but they can be arranged within days and they are quite easy to get. This has made them popular with specific demographics. Who Uses Hard Money Loans? 1. Fix and flippers love these loans, because they only hold properties for short periods of time, so a lengthy mortgage is not suitable to them. If you add up all the time it takes to complete a fix and flip, you quickly arrive to a time frame that most people do not expect or plan for. Total completion time: 20 weeks (4 to 5 months). 2. Property builders, who use these loans to purchase land, build a property, and sell it. Again, this doesn’t take a lot of time. 3. Investors, such as real estate investors who see an amazing deal that simply cannot wait. Because a hard money loan can be organized in days, due to the fact that these lenders are essentially real estate investors themselves, it is the perfect solution for urgent deals. 4. People with bad credit who have a deposit ready. They may have had a recent default, foreclosure, or bankruptcy on their file. If they have cash and have spotted a property of value, then they may be considered for a hard money loan. Bad Credit and Hard Money Loans Technically, hard money loans were not designed for people who want to buy a primary residence. However, with so many people having bad credit or otherwise not meeting the standards set by regular lenders, they have become a viable option to consider. Essentially, people use them as a bridge loan, meaning that they take the hard money to buy their home, which is usually a two year loan. During this time, they rebuild their credit, meaning they will be able to apply for a conventional mortgage once the time is up. Getting a Hard Money Loan It is important that you check directories of hard money lenders so that you find the one that is right for you. This also means being aware of how these loans work. Usually, you will only be able to receive a loan for around six months to a year, although some hard money lenders now extend this to five years. You can also expect to pay substantial interest rates, usually between 12% and 21%. Furthermore, you usually have to pay for “points” or other types of fees. Hard money lenders charge other fees besides the interest on the loan. The fees are a source of income for investors of hard money loans and it is important you understand the sources of income to negotiate the best rate and terms for your deal. You also have to have a substantial deposit available yourself in order to qualify for a hard money loan. It is rare for lenders to even consider you unless you have at least 25% of the value in a deposit. The loan-to-value (LTV) rate is often as low as 60%, meaning you may have to save up for a 40% deposit. .center_container #informationFacilitiesContainer h1 { color: !important; } .tms-card-container h2, #categoryFacilitiesContainer h2 { color: !important; } .tms-button { background-color: !important; } .center_container #categoryFacilitiesContainer #categoryCardContainer .col .card-title { color: !important; } .pagination-container .pagination li a { color: !important; } .center_container #browsingFacilitiesContainer h1 { color: !important; } .center_container .tms-card-container #facilityCardContainer .card-title { color: !important; } browsingFacilitiesContainer html a { color: !important; } Corridor Funding 18534 Forty Six Pkwy #4, Spring Branch, TX 78070 Corridor Funding is a San Antonio based lender created to offer outside-the-box loan solutions to commercial and residential real estate investors loo... 1st Choice Mortgage Company 3023 E Copper Point Dr Suite 101, Meridian, ID 83642 1st Choice Mortgage Loan Advisors are Mortgage Experts, we have been in Idaho for over 25 years, so we KNOW IDAHO and we know Idaho Mortgages! We t... MM Lending 4165 Westport Rd Suite 204, Louisville, KY 40207 Fast and Easy Lending for Real Estate Investment Property in Indianapolis, Louisville and Cincinnati. “Private Lending”, “Fix and Flip Funding�... MILLER BATES LLC 1245 Brickyard Rd Suite 100, Salt Lake City, UT 84106 Shortly after graduating from the University of Utah, Dick Miller began his career in real estate with Chrysler Realty. He spent several years managin... Mojave Capital 3127 E Warm Springs Rd #400, Las Vegas, NV 89120 Fix & Flip Residential Financing, Commercial, Construction, Development; a hard money loan may be just the right solution. Mojave Capital is an equ... Stearns Home Loans - Santa Cruz, CA 317 Soquel Ave, Santa Cruz, CA 95062 Stearns was born of the idea to help people succeed – also knowing that success looks different to every individual. Daring to create an environment...