When traditional lending institutions like banks and credit unions are unable or unwilling to provide funding, hard money lenders can be a valuable resource. Hard money lenders are private individuals or companies that provide short-term, high-interest loans secured by real estate. In this blog, we will discuss what hard money lenders are, how they work, and how to find them.
What are Hard Money Lenders?
They are private lenders who provide short-term loans secured by real estate. Unlike traditional lenders, they do not require extensive credit checks or lengthy loan applications. Instead, they base their lending decisions on the value of the property being used as collateral.
Hard money loans typically have shorter terms than traditional loans, ranging from six months to a few years. They also have higher interest rates, typically ranging from 8% to 15%. These high rates reflect the increased risk that lenders take on by lending to borrowers who may have poor credit or are unable to secure funding through traditional means.
How do Hard Money Lenders Work?
They provide loans to borrowers who cannot secure funding through traditional means, typically due to poor credit or other financial difficulties. These loans are secured by real estate, typically a property owned by the borrower or one that they plan to purchase.
To assess the value of the property, lenders typically require an appraisal or inspection. Based on the value of the property, hard money lenders will then offer a loan amount ranging from 50% to 70% of the property’s value.
Hard money loans are short-term loans, typically ranging from six months to a few years. They also have higher interest rates than traditional loans, reflecting the increased risk that hard money lenders take on by lending to borrowers who may have poor credit or are unable to secure funding through traditional means.
How to Find Hard Money Lenders
Finding a lender can be challenging, as they are not typically listed in traditional directories or databases. However, there are several ways to find them:
Online Directories: There are several online directories that list this type of lender. These directories can be a valuable resource for finding lenders in your area.
Real Estate Agents: Real estate agents often work with hard money lenders and may be able to provide recommendations.
Networking: Networking with other real estate investors and professionals can help you find lenders in your area.
Local Real Estate Investing Clubs: Local real estate investing clubs often have members who are hard money lenders. Joining a club can provide access to a network of lenders.
Referrals: Referrals from other real estate investors or professionals can also help you find lenders in your area.
In conclusion, hard money lenders can be a valuable resource for borrowers who cannot secure funding through traditional means. Hard money loans are secured by real estate and typically have higher interest rates and shorter terms than traditional loans. Finding a great lender can be challenging, but there are several resources available, including online directories, real estate agents, networking, local real estate investing clubs, and referrals from other professionals. When considering a hard money loan, it’s important to carefully assess the terms and make sure that you can repay the loan on time. To find out more about our hard money loans or to reach out to one of our hard money lenders, contact us today! We look forward to hearing from you!