Hard money loans can make or break your success in the real estate world.  Although it’s not entirely necessary these special types of loans can put you over the edge while ensuring your success when trying to purchase a property.  This can mean the difference in winning the bid of a lifetime and losing several consecutive bids.

When you are dealing with a hard money lender they will need to see your hard assets that guarantee you have the right capital to be approved without a credit check or income requirement.  You can understand why lenders like to deal with these loans as opposed to soft loans where the liquid assets aren’t in the person seeking the loans possession.

Hard money basically refers to the fact that the lender is insured of payment over the course of the loan.  Your assets will be used as the collateral and if you fail to pay the mortgage the lender will be able to get all or some of your assets depending on the terms of the loan.

Getting loans approved can be excruciatingly painful, not to mention they typically take a long time (30-45 days).  Getting approved on a hard loan can take as little as 5 minutes and the paperwork is significantly less than with traditional loans.  

When applying for a hard money loan the lenders really only care about the value of your property or liquid assets.  When they are happy with this they are quick to approve you and move forward with the sale. This is also why going for a hard money loan will put you ahead of the game when you are competing against several other people vying for the same property.  

The usual hard money loan is 1 to 5 years so you end up saving tons of money in interest in the long run.  However, they can be expensive in the short run so keep this in mind also.  Meaning interest rates are generally higher on hard money loans but they are not 15 or 30 years of piling interest.    

Private lenders who work with hard money loans allow you more flexibility.  You can work out a repayment plan that is more on your terms than with traditional loans.  Big banks like things on their terms and trust me they are going to get every last penny from you they can.  They’ll do whatever it takes to earn an extra buck and don’t care if you like it or not.

Who is a hard money loan for?  Hard money loans make a lot of sense for those flipping houses.  You own one property and apply for the money using the equity in that property then have that one sold,  And then you use your new property to get the next loan and so on. You should keep in mind that you can still use a hard money loan on a property that you intend to keep or stay in longer, however, you should refinance this loan Asap, typically within one year.

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