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Hard Money Mortgage

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Hard Money Mortgage

Borrowing from a hard money mortgage can be a scary deal to get into, but it can undeniably be beneficial to someone in the right conditions. A hard money loan is a type of asset-based loan through which a client borrows money protected by the value of a real estate property.

Hard money loans primarily fund a loan based on the amount that the property is worth. These kinds of loans tend to work in short periods of time (1-3years), high interest 8-12 percent and normally stay between 50 to 70 percent loan to value. The high interest percentage comes due to the high-risk that lenders deal with when lending to someone with minimal information.

There are several types of hard money loans, common ones include: mortgage refinancing, equity loans, and bridge loans. Mortgage Refinancing pays off one or multiple loans that are protected by a property. It can result in a new loan, generally with a larger starting value than the first loan. Equity loans tend to fund quicker due to that they are secondary to an existing mortgage. A bridge loan is a money quantity loaned by a hard moneylender to cover a gap between two transactions. Sellers who want to buy a new home, but need the cash from a primary property before making the deal use this kind of loan.

Why would a person petition for a loan with such high interest? Hard money loans are often called ‘last-resort loans.’ Several reasons can cause individuals to depend on hard money. An individual may not be able to receive a conventional loan due to bad credit, lack of filed paperwork, they may not have documented their taxes, a primary home may not be paid off, etc. Hard money mortgage may not be cheap, but they can make a bad situation better and sometimes they may be the only choice that is available to a borrower.

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