The hard money lenders are in business because of the rehabbers that needs the quick money for the renovation project. The hard money performs the functions of paying the contractors, covering any expenses and sometimes to acquire a new property. The borrowers are able to access the liquid money faster than the conventional types of lending. The following are some of the issues that you need to know before lending the money.
Short Term Loans
You will be required to pay the amount within the shortest time. You will be expected to repay the whole amounts for the periods not exceeding three years. The interest rates payments will begin immediately and the borrowers should clear the principal amounts once the sales of the house is done. The amounts that you can qualify for are determined by the size of the project that you have.
Fast Turnaround Time
The lenders have no complex documentations during the applications. The lenders have quick processing and approval processes ensuring that you get your money within the same day of applications.These quick processing ensures that the investor have a competitive edge over other investors. Your finical history will not be used and the value of the property after the renovations will influence the amounts that will be disbursed.
The financiers have different requirements when it comes to this kind of lending. It is easy to convince the lenders by providing the details of the repair cost of renovations and the anticipated price after the renovation. The rehabber will be required to produce the repair estimates, property appraisals, and the current tax returns.
Most Lenders Cap Their Financing At 70%
The maximum financing of the property is influenced by the qualifications of the investor. The standard amount of financing does not extend for more than 70% of the value of the property once the repairs have been done. The remaining 30% ensures that the lender is safe and that they can cushion against defaulting from their clients.
The 30% Capital From The Borrower Shows Commitment
You need to take part in your repairs and constructions by raising the 30 % capital. As a borrower you should consider other forms of financing such as the credit cards.
The hard money lending has led to the boom in the reals estate business as a result of the quick access to financial aid.They provide the lending based on the estimated value of the property. The companies have their own terms of lending. Most of the companies are flexible and diverse in the types of lending that they offer.