How does a hard money loan work ?

Question

How does a hard money loan work?

Account Closed · Answer

@Cerise Goldberg can you elaborate on your question a bit? Hard money lending a large industry and there are lots of components to how it works.

In general, a lender will give you a loan based on the value of the property vs your credit worthiness. These loans are typically going to be short term (12 months) and interest only with higher interest. They're best used for fix and flip projects, or as a way to quickly purchase a property.

Let me know if you have any specific questions about hard money loans!

Bob Reinhard · Answer

@Cerise Goldberg

Howdy.

The same as every other loan except the loan is asset based instead of your credit being used. Appraisal required.

Loans close very quickly because of this.

Rates are higher, points are involved as with conventional loan, term is usually 12 months or less.

Much success.

Bob

Account Closed · Answer

@Carolyn Gage like others have mentioned, you can definitely refinance out of a hard money loan into a conventional loan. The new lender will do their usual due diligence, i.e. pulling your credit, ordering an appraisal, and reviewing your financials to see if you qualify for the loan. How you're currently financing the loan isn't a big deal to them since they'll be paying off the hard money loan when you refinance anyway.

Hope this helps!

Carolyn Llerenas · Answer

@Sean Pan

Excellent. I don’t know what word you used, but you triggered that light bulb for me! Haha

Thank you!

Account Closed · Answer

@Carolyn Gage haha awesome! Feel free to reach out if you have any more questions about hard money loans!

Cerise Goldberg · Answer

Thanks

David M. · Answer

@Carolyn Gage

"refinacing" is really nothing more than getting another loan.  Usually, you have to pay off the first loan so that the new loan has the 1st position lien.  So, it really doesn't matter what sort of loan, or loans, you already have on the property.  So, you have to go through whatever hoops required for the new loan.  Its just dependent on the new loan, it doesn't/shouldn't matter what loan you have currently.  The lender shouldn't really care.

Carolyn Llerenas · Answer

@Sean Pan

I have question…can you refi out of a HM loan into a conventional loan? If so how does that work?

Thank you kindly.

Cerise Goldberg · Answer

Thank you

How does a hard money loan work ?

Most Popular Reply