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May 11 2017

rcdcapital

Exactly what is a Hard Money Loan?


Up to 90% LTV on Purchase for Individuals, S or C Corporation, or LLC.
Private loan money is most often referred to as hard money, and usually the loan develops from a source that are experts in structuring such loans. Generally a tough money loan will contain an initial mortgage on the residence thus creating hard money residential loans. There are a variety of identifying factors involved with private loan money that will be known as hard money loan.

Residential or Commercial Hard Money Lending
For instance, as mentioned it is almost always a first mortgage. Because the borrower's credit is not important around the amount of equity in the property, a first will in effect prevent a potential loss of the whole property if, for instance, another loan is "ahead" from the hard money loan. Exactly why the borrower's credit does not matter much web hosting loan money is that the lender looks to the property for its security, and the lender may also be paid dearly for the chance that the lender takes by basing all the money around the property value alone.

The thing is, another part of a tough moneylender is the fact that they usually charge high rates of interest as well as high points. At times, if the rentals are secure enough, those high points will be rolled into the actual loan. Often the loan isn't paid within the typical Principle + Interest (PI) but most likely is interest just with a balloon at the end of the stated loan period. In this manner, in effect, the borrower is paying interest on interest, since points are interest, because the mortgage might have been calculated such as the points, then every payment you makes, paying interest only, is really interest on interest.

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