Hard Money Basics for an REO

[Zoltan Harta]

Hi BP,

New to the investment world, and very new to Hard Money Lending.  From my basic understanding of this type of financing, it seems to be an avenue for me the near future to get up and running but there are some questions I had (and I apologize ahead of time for any dumb questions):

Q1 - From my understanding, HML will lend an amount to cover cost of home + rehab costs? Is that correct?

Q1A - If so, what happens if I over/under estimate the rehab costs?

Q2 - Is the loan amount collected at time closing? For example and for sake of round numbers, I have a HML loan for $120k ($100k purchase price + $20k rehab cost) with a 12% rate...does the $134,400 get collected at closing of sale of property or is it similar to a mortgage and paid back over the short period of the loan?

Q3 - Do banks accept HML offers on REO properties? If so, is there anything different in making an offer an REO when using HML vs Cash.

Thanks in advance!!