Who knows the term hard money?
Hard money is a private money loan, money you will receive from individuals who will lend you their money against your real estate, the hard money lender is the bank and the bank will lend you your money and place a lien on your real estate, which same with hard money lenders.
What is the difference between the programs of hard money lenders and those of the bank across the street?
1. Hard money lenders can help investors with large loan amounts, while banks will make it very difficult for the borrower to lend these large amounts, so the loan will likely end up with an insurance company to lend the money and requirements are high.
2. Hard money lenders can finance any hard money loan within a week whereas for banks it will take at least a month or even more.
3. Hard money lenders will ask for very little documentation, while banks will ask for almost everything you have, taxes, income, assets, property history before and after purchase plans, business license, basically they will definitely want see more of you to lend you some money.
4. Hard money lenders have guidelines, but they can make exceptions without processing them through an entire underwriting team, while the bank needs to go through different departments, underwriters, and processors just to make an exception, and then the exception won’t be excepted.
As you can see, getting a hard money loan is much easier than getting a loan from a bank because of the whole process, banks are big companies and big companies have a lot of different rules within their companies, and getting an exception for these rules is almost impossible, and that is why many investors prefer to go with a strong money lender.
So now you are probably thinking what is the problem with hard money lenders. Ok, let’s talk about all the reasons why you shouldn’t consider applying for a hard money loan:
1. Hard money lenders for their services will charge you 4-9 points for the loan, while banks will charge you only 1-2 points. Example: If you have a loan amount of $1,000,000 and your hard money lender will charge you 5 points up front, then you will pay $50,000, while the bank will charge you 2 percent, which is $20,000, that’s a small difference but under different circumstances for some people it is still a great deal.
2. Hard money lenders due to the fact that they will lend you money without showing your credit history and income, will set the interest rate on the loans at 9 percent-15 percent, while banks will set the interest rate of their loans by 7 percent. 10 percent, again, that’s a big difference if you’re thinking about it, but for these people who want hard money loans, it’s still a great deal.
You need to understand that most investors or homebuyers today cannot qualify with banks for any type of loan, hard money lenders can get you the deals you want (foreclosures, reo) without even thinking about showing all the paperwork unnecessary, all you need to have is some money in your pocket if you are buying, and if you are refinancing then you need enough capital as hard money lenders will probably go up to 65 percent max, also to find good hard money lenders It’s not that hard, it’s actually very easy because there are many private hard money lenders who are looking for real estate and IOUs to buy so they can make their points up front and of course the high interest rate if you think about it is Much better than putting money in the bank.
Example: If a hard money lender deposits $1,000,000 in the bank and the bank will pay you 5 percent per year, while if you lend the money to an investor who wants to buy a property or refinance a property, it will charge you 5 percent per year. hundred. points and you’ll get a 15 percent interest rate on his money, that’s a big difference. Good luck to all investors out there.
