A Guide on Hard Money Lending

If you are looking for some extra funds in times of financial hardships or for your next big project, taking a loan can be a great option. But there are so many loan options that it can get challenging to pick the right one. Hard money lending in New York can be beneficial for you if you are looking for some quick funds and do not qualify for the eligibility criteria of other loans.

What is a Hard Money Loan?

A hard money loan is simply a short-term loan secured by real estate. These loans are funded by private investors as opposed to conventional lenders, such as credit unions or banks. A hard money loan is usually for one year, but you can extend it for a longer term of two to five years. Investors looking for finance options but do not want to involve their bank would surely know about hard money. This type of private financing is generally a more lenient criterion.

Hard Money Lending Vs. Other Lending Types

The main difference between hard money lending in New York and the lending type is that the former does not bother about the borrower’s credit history or income as collateral. Instead, the lenders consider the property’s value as the main determining factor emphasizing it's after repair value (ARV). ARV is the value of your property after the renovations. Some other common differences include: -

• Hard money lenders do not invest their money in private residences. That is because owner-occupied residential places are generally risky for lenders as they come under several rules and regulations.

• Hard money loans are generally short-term. There is no luxury of repaying the loan in a period of fifteen to twenty years. You are typically needed to repay it within the period of six to eighteen months.

• Hard money lenders have their own lending criteria. A private lender can be your friend, family member, or business associate. So, they might not have preset criteria. It will give you room for flexibility in negotiating the terms. A hard money loan, on the other hand, comes with a complete set of criteria, duration, and interest rates.

Who Should You Use A Hard Money Loan?

Real estate investors go for hard money loans for several reasons. The main reason is the quick funding. In most situations, the hard money loans can be funded within a week, compared to 20-25 days for the banks to grant the other loans. The application process for the hard money loan takes just two to three days. In some cases, you might get the loan approved on the same day itself.

Apart from the fast approval, another reason for the borrowers to go for this loan is multiple rejections by the banks for conventional loans or financing. Banks consider income history as an important factor. If you have started a new job, the banks might not give you a loan considering an insufficient income history. But the hard money lenders look past these issues.

In hard money financing, your property itself is the collateral for the loan. Some lenders agree to accept other assets like the residential property under your name or your retirement account as a basis for starting the loan. Hard money lenders allow the investors to leverage other people’s money. It means that the investors can fund more than one person or deal at a time. There is no such thing in the case of traditional loans.

Conclusion

When the banks say no to your loan request, hard money lending will be the saving option for you. If you are interested in hard money loans and looking for a trustworthy lender or want some information about the 20 year fixed mortgage rates by year, RCD Capital would be the right option for you.