Hard Money Loans

Whether you are a first time home buyer or seasoned investor, one thing you probably know is you need some kind of funding in order to purchase a property. Funding for homes comes in all shapes and sizes so even to those that are experienced in the real estate industry, there’s still more to learn as the market is always changing. The experts at KC Funding can help you guide you along the process and help you secure financing no matter the situation so don’t be afraid to reach out.

What Is Hard Money?

Hard money is a short term loan that is backed by the property and its value whereas many other loans are based on the individual’s credit and debt to income ratio. Hard money loans are usually private loans funded by an individual investor ro a private company like KC Funding. They also send to have a higher interest rate than you would see with a conventional loan offered by a larger bank.

What Is It Used For?

Hard money loans are usually sought after in scenarios when the funds need to secured quickly and paid back in a shorter amount of time than you would find with a traditional mortgage. One of the more popular ways that a hard money loan is used is in the situation when you want to purchase a home, remodel it, and then sell it for a profit. This is known as fixing and flipping.

If a home is to be purchased for a flip, it would make sense to both the buyer and lender to use the home as a collateral because both parties want to flip the house quickly because they will both gain profit the sooner to house is sold.

Hard money loans are great for short term projects like a fix and flip because they don’t require all the paperwork that you have to deal with in a conventional mortgage. Your credit score is not as big of an issue so you can get approved directly with a private lender and started working in a very short time. They want to get you the money as quickly as possible, because that means you can start working to get that money back to them just as quickly.

Fixing and flipping isn’t the only reason you may want to consider a hard money loan. Lenders that issue hard money loans have the ability to customize your loan for your unique situation. You may want flexible terms when it comes to payments because it suits your project, and this type of scenario can be discussed and agreed upon with the lender as they don’t have to follow the typical housing rules and regulations.

Contact Us Today!

Hard money loans are very useful when it comes to specific situations and can truly benefit both the borrower and the lender if used correctly. If you have a project on your mind that you think might be perfect for a hard money loan, reach out to the trusted team at KC Investor Funding so we can get you started today!

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Hard Money Loans

A hard money loan is a specific type of asset-based loan financing in which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

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