The Advantages of Hard Money Lending
Hard money loans offer a host of benefits for investors in the market for a real estate mortgage today. The advantages of hard money lending are what is driving the demand from borrowers and investors in today’s economy. Hard money loans offer investors the luxury of less paperwork and shorter underwriting periods which lead to quicker capital acquisition. In the industry of real estate investing, speed reign supreme as investors can only earn a return off a property if they acquire it before somebody else does. The speed of finding funding for your real estate deal also allows you to capitalize off of lower price levels, granted the property does not experience higher buyer demand.
Hard money loans are simply a non conforming loan that is lent from a private lender, often times an investor. They are referred to as “hard” money loans because they are backed by a hard asset, most commonly real estate property. The hard asset is used as collateral in the event that the borrower cannot meet the payment obligations arranged between him and the lender. Hard money loans terms usually have a limit on the loan to value ratio (LTV) on which the loan is to be lent. The loan to value ratio compares the value of the loan to the value of the property. Hard money lenders like HML Investments typically lend up to 65% LTV and charge interest rates between 8-14%. This higher interest rate is a reflection of the added risk involved. Although investors take on this additional risk, the hard asset assists in providing an exit strategy in order to recoup the invesment and make a potential profit of the re-sell.
For more information about the advantages of hard money, contact the specialists at HML Investments today.