Despite the relaxed parameters in hard money loan application, Oregon hard money lenders only approve loans for hard money if the property involved is commercial, business, residential, and/or investment properties. Hard money loan refers to real estate mortgage that are collateralized against the quick-sale capacity of the real estate from which the loan is made. Normally, the loan amounts should range $25,000 to $50,000,000 or even more on commercial deals.
Hard money loans are popular for their high interest rates, which are normally two or three times higher than the rates given by conventional lending institutions. For those who are not familiar with how hard money lenders in Oregon (and almost all hard money lenders in the country) operate, paying for a loan that has very high interest is ludicrous. Understand, however, that Oregon hard money are money of private individuals who decided to loan their money with the desire of receiving a return that commensurate with the risk of their investment. Rates of private money loans generally range from 10 to 15% and are determined by looking at these factors: loan to value ration, strength of the borrower, quick-sale value of the property, and equity of the borrower.
At the same time, people often have connotations about private money borrowers as desperate, in trouble, or without options. Some of it is true, however in Oregon, private money borrowers are often individuals or businesses that are in situations that do not suit the rigid guidelines of conventional lending. In addition, most of the borrowers require fast processing of loans, which is not possible through institutional lending. Others meanwhile think that hard money loans are the same with debt consolidation loans or personal loans. As mentioned, private money loans are sourced from individuals who chose to invest their money by lending it to other people. Debt consolidation loans and personal loans are served by banks and large lending institutions.
For those who are knowledgeable and experienced in hard money lending, hard money lenders provide greater flexibility with regard to the loan types and the circumstances under which the money will be lent. The collateral is given more importance by hard money lenders compared with the qualifications of the borrower, although both are always evaluated. The terms of payment could be as short as one day to a maximum of five years as in most cases. Meanwhile, as with any other loan, all delinquent taxes and other liens on the property will be deducted from the proceeds unless otherwise stated. The borrower is also expected to play all closing costs and fees for the hard money mortgage loan.