hard money loans, what are the pros and cons?
Jul 08, 2009
in
Hard Money Loans
I want to get started in real state in California. I heard the term hard money loan and I’m interested in looking into it. if any body could tell me much of what they know about it (rates,requirements, techniques, loopholes…etc.) that’ll be appreciated for life. thanks!
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4 comments
dday2086 on July 8, 2009 at 12:53 am
The pros of a hard money loan are simple if you can’t get the money any other way it beats out all of the conventional loan programs that turned you down.
Cons are the rate are higher, loan fees are generally higher, they are usually Adjustable Rate Loans (ARMS), there may be pre-payment penalties.
I know they sound bad but honestly if a hard money loan gets you to the end result you want and you can afford the risks they can be the correct way to go. Any choice when picking a loan should be based on the "dollars and cents" math. Emotion plays but it should not automatically out-way the math.
Private money is another option. For the right return and balanced risk you can advertise for investors. Make sure befor you work with any lender you look at the terms in writing. not all ahrd/private money investors are in the mob.
Good luck.
Before committing to a hard money loan make sure to exhaust all of your loan options. Look for bond/grant programs, USDA Loan programs, and FHA loans. Find out if there a economic redevelopment loans in your area.
kdaugherty81 on July 8, 2009 at 12:53 am
Here’s all I know about them
Pros: if you have difficulty getting a loan through a bank or mortgage company for whatever reason (credit too low, can’t document income, unique type of property) then you might still be able to get a hard money loan
Cons: rates can be much higher than what a bank or mortgage company would offer; you might get hurt if you don’t pay it back (depending on who loans you the money, i.e. the mob); you usually have to put a significant amount of money down on the home (30% of value)
I see it as a last resort
kemperk on July 8, 2009 at 12:53 am
wow, my timing and your timing is
great……
"Hard Money and Other Creative Investment Systems
NO Risk Investing Does Exist"
this is an article on this subject I wrote for associated Content.com
It was part of a post graduate degree requirement.
YOU did not indicate if you wanted to become a lender or a borrower!
RayN-is-back on July 8, 2009 at 12:53 am
I use to deal only with banks but a few years back i made contact with a hard money lender Cost about the same And it was so easy He came out look at the property "how much you want " No docs nothing Ask him why "your not going to let me have this property for that amt of money”