Frequently Asked Questions
1) What are the typical interest rates for hard money loans?
Hard money interest rates can be higher than bank rates. Hard money loan rates range from 8-12%. The rate is determined by factors such as the condition and type of property, down payment, and equity in the property.nt goes here
2) Is there a time limit for the renovation of hard money rehab loan?
Yes, the renovation should start within 30 days after the closure of the deal. The renovation period is usually six months after the issuance of rehab loan.
3) What are the sources of money for a hard money loan?
Hard money comes from private investors and not from banks. These private investors can be an individual, a group of investors in which each investor invests his share of money in your loan, or it can be a group of investors who have pooled in their money collectively and not by fractions.
4) How to discern between a fraudulent private investor and a genuine one?
Private money loans involve more risk than conventional loans. Before you borrow money from a private investor, you should thoroughly research his credentials. This can be done by looking into his history, talking to his previous clients and looking for complaints that may have been lodged against him.
5) What are the benefits of hard money lenders?
Hard money loans have the following benefits over traditional bank financing:
- Less documentation and simpler application procedure
- Allocation of funds in lesser time
- Borrowers will be saved from the humiliation of being rejected by a bank
- Self-employment is not looked down upon by hard money lenders
- Perfect credit is not a must with hard money lenders
6) Why are hard money loans so expensive?
Hard money loans carry a much higher risk than traditional loans. Hard money loans are meant to be a short-term solution, and most individuals who use this type of loan have many property type issues that may prevent them from qualifying for a better interest rate.