Hard Money Lenders

What is hard money?  How can a hard money lender benefit you?  Why would you use a hard money lender?

A hard money lender (HML) is someone who lends money out for a relatively short period of time at a higher interest rate.  Often a HML will lend to someone based on the property they are purchasing and the profit potential of that property as opposed to basing their decision solely on the borrowers credit score and credit history.  They can be super beneficial if used in the correct way.

Benefits

-Great if you need money for a short period of time.
-Excellent for a rehab project w/ high profit potential
-Good for people with less than perfect credit
-Great for investors who purchase a high volume of properties
-Sometimes can benefit people with small amounts of personal cash
-Most hard money loans do not show up on your credit report
-It is normally easier to build a solid working relationship w/a HML as opposed to a banker
-They will often finance the full purchase price and the full rehab cost
-Will lend on lower priced properties in less than desirable areas

Negatives

-High interest rates make high monthly payments (12%+)
-Length of loan time is often short (6 months – 20 years)
-Points up front (3%+)
-Low LTV loan amounts (they lend based on equity)

There are local HML’s as well as national.  If you are looking to use a HML Intelivest recommends that you find a local HML who knows YOUR area and has a good reputation in YOUR area.