Hard money, also known as private money, is a type of loan for people who don't qualify for conventional loans. There is a variety of uses for hard money.Hard money loans will typically have lower LTV'S and higher interest rates then standard mortgage programs. If you have a large down payment or lots of equity in your home then this may be your only option if you have very poor credit.
One slight down side to having a private or hard money loan on your property is this. Since private individuals or entities normally make these loans, they do not report to the major credit bureaus. This means that even though you are making your mortgage payments on time, it does nothing to improve your credit score. Additionally, when you go to refinance out of the private money loan it becomes difficult to establish your mortgage payment history. The new lender will require that the history be documented.
Hard money loans should be very carefully considered before entering into one. These are usually very high risk loans and can have severe consequences if you are late on your monthly mortgage payment. Weigh all options before entering into a contract for a hard money loan and make sure you are completely aware of all guidelines and terms of the loan before signing the closing paperwork.
A hard money loan is a loan collateralized on real estate based on the quick-sale value of the property which the loan was drawn on.
Many Hard Money Loans require a BPO in addition to an appraisal.
A BPO is a Broker Price Opinion from a real estate broker to find out what the house can be sold for if in must be sold quickly.
The Hard Money Lender usually has a list of BPO vendors that they will accept.
Contact Darrin L Neu at 888-275-6788 or info@bestnodocloans.com for more information about Hard Money Loans.
Hard Money
Private Money used for loans that do not qualify for traditional loan programs.
» You cannot verify any source(s) of income or employment;
» You are not willing or able to provide a "future value" appraisal for a hard money construction loan or remodel loan, including an itemized cost sheet, plans, blueprints, a licensed contractor,
and permits where required;
» You cannot repay the loan according to the terms of the Note;
» You are not willing to pay for and obtain a current value appraisal, if required;
» You are looking for an "angel" or speculative investor to fund a project without sufficient collateral or personal equity stake;
Be very careful when going with a hard money loan because the consequences are can be very rough. An example, such as paying it late once, can possibly forfeit your ownership of that property.
» You would have less than 30% or more equity remaining in the property after the new loan, including any points and fees financed (Note: the amount of required equity for hard money loans varies by property type and investor);
» You are looking for a low-interest rate loan, or a loan with low points and fees;
Do not consider a hard money loan if: …
» Your property is in poor physical condition, or has extensive deferred maintenance (unless the loan is used to verifiably renovate the property).
» You are looking for an unsecured or personal loan, or open-ended line of credit;
If you are facing foreclosure a private money loan can help you get a fresh start. Pay your private mortgage on time for one year and you will be able to refinance into a much lower rate loan. During this time, it is important to clean up your credit and remove negative items from your report.
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