How To Begin With A Commercial Hard Money Lender

Commercial Hard Money Lenders can be quite a effective financing solution for property investors. Lots of different funding choices can be found simply by using a lender of this variety.

One big advantage of using a hard money lender rather than a conventional lender such as bank is that generally you can get a loan in much shorter period of time. It could take a bank up to sixty days to originate a loan whereas a hard lender can sometimes do it in less than a week. For those deals where time is of the essence this is a crucial aspect to deciding where to borrow from.

Another advantage of using a hard money lender is how accommodating they can be. So these loans can be specialized for each particular borrower and property. Private lenders will generally strictly enforce the terms that are agreed to, however. The reason for that is that unlike banks, a hard money lender has his own capital on the line and therefore must be more careful.

A higher interest rate will need to be charged because of the much higher risk a hard lender takes on. The interest rate will be higher than most conventional loans, ranging anywhere from ten to twenty percent. These interest rates may seem exorbitant but it must be remembered that most hard loans are shorter term than conventional loans and so the interest you pay may not actually end up being that much.

Most areas and communities have many commercial hard money lenders in business and granting loans. The web is one place to start looking for one. Or you can find one by word of mouth. Getting referred by someone you know well is a good way to ensure you will be working with a trustworthy lender. Try to find some one that you can work with on a regular basis.

Proof of income is one requirement of almost all hard money lenders. This may be in the form of bank statements, payroll stubs, or other documentation. Collateral is yet another requirement. Most times the collateral will be the property you are getting the loan to purchase. However, if the value of that property is not enough to cover the loan, the lender may require you to offer additional collateral as well.

Commercial hard money lenders have been a great lending service since the housing crash happened. And they provide a much needed service and market need that was not being met by the banks. Just try to be as informed as you can before using a hard money loan and you can reap the benefits of a fine lending service.

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