Hard Money Lending
Hard Money Lending Tips
Wow! You came across an excellent opportunity on a real estate deal. It is really a great deal for you but what happens if you do not have enough time to come up with the money that is needed for the deal to be closed or your bank just won't provide the needed financial amount for securing the property? Will you just sit down and cry like a little baby or will you look for another option to obtain the golden real estate deal? Read more great facts on minneapolis hard money lending, click here.
One of the alternative ways to avail in order to obtain this property is through the help of a hard money lender such as Minneapolis private lenders. Hard money loan is a type of loan where in the funds received by the borrower is being secured by the value of a portion of the real estate property that the borrower is buying. This is a very useful type of lending method when it comes to the needs of quick money for purchasing real estate properties that requires the needed funds in just a short notice. However, you should not do any rush decision when it comes to hard money lending as there are several different important components that needs to be checked before availing of one. For more useful reference regarding minnesota hard money real estate loans, have a peek here.
Consider The Costs
Hard money lenders like minneapolis private lenders have a higher charge rate compared to banks due to the fact that the credit profile of the borrower is not important in this type of lending, hence the value of the property is for the very reason that it is used as a collateral for this type of lending and aside from that there is a short turnaround time for the requested money to become available to the borrower which gives more reason for higher charges. The lending rate then does not apply to the rate that the banks charges. The rate that hard money lenders charge will depend on the hard money credit availability and the real estate market. Hard money lender rates comes in a minimum of 12% up to a maximum of 21% upfront charges and will have additional higher charge rate incurred if ever the lending payment terms is not met consequently by the borrower. Although hard money lending have an anticipated higher charge rate, it is still very important that you are making sure that the rate that you are charged with when it comes to hard money lending is the normal standard range in the market.
When it comes to hard money lending the borrower should know that the typical amount of funds that the lenders should lent must not be of a loan to value ratio as banks do, instead it must be a loan to value basis. The usual loan to value ratio is around 60% most of the time.