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Need Loans For Your Real Estate? Go For Hard Money Loans!
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Posted On :
Nov-14-2011
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Article Word Count :
515
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A hard money loans are a distinct loan financing by which the borrower borrows money on his property worthiness instead of credit.
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A hard money loans are a distinct loan financing by which the borrower borrows money on his property worthiness instead of credit. These types of loans are issued on extremely high interests than usual sub-prime loans for residential property and are never issued by banks. These types of loans have their origins in North America. A hard money loan is specially used in the following situations:
1) Turnaround situation that is, when the company is in search of financial recovery by changing the management after identifying its problems.
2) Short-term financing
3) A hard money loan is also used by a poor credit borrower having substantial, real estate and wishing to stave off foreclosing.
4) Some also use this loan in extreme financial condition such as bankruptcy or arrears on an existing pledge.
Hard money loans are loans where collateral security is the property by default, and the amount is decided on the basis of quick-sale value of the property. These loans have a low LTV (Loan-to-value) ratio as the loan lingers around only 60% to 70% of the market value of the property. Now the value or ‘market price’ of the property is referred to ‘today’s purchase price’. This value’ is reasonably decided by the lender by considering the market value of the property within a time span of say 6 months, so that he earns a profit eventually if he has to sell the property within the span. So, a hard money loan alias conforming loan may be considered as say 60% to 70% of a total commercial estate purchase price.
These types of loans have extremely high interests often percentage reaching beyond 12% and often reaching up to 21%. A hard money loan carries extra risks for the borrower but still the borrower opts to pay loan interests rather than selling the property. Sometimes the hard money lenders take prepayment penalties. On the other hand, commercial hard money has a higher point level that is, about 10 points. The reason that a borrower will pay these rates is to avoid a quick-foreclosure. Hard money loan, the borrower often staves off foreclosure and extends his time to get his affair managed after borrowing hard money loan.
All the borrowers are advised to use professional attorney of the real estate to ensure the fact, which the property is not taken away due to late payment without the benefit of the court judgments.
Hard money loans are lent by hard money lenders having a strong financial organization that has high reserves of deposits. Some private investment groups also supply loans allowing the borrower to purchase the property for a certain span of time. Otherwise, the lender will keep the property at the price agreed prior by the borrower. In spite of certain risks, you can have hard money loans without hesitations if you are sure that you can repay that money back. So it’s time to grab the opportunities, and run for getting a hard money loan to have your estate back.
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Article Source :
http://www.articleseen.com/Article_Need Loans For Your Real Estate? Go For Hard Money Loans!_104117.aspx
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Author Resource :
The author of this article is working for Funding Database. If you want to know more about private money lending or private lender, visit the website linked here. Discover the world of Money lending evolution
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Keywords :
private money lending, private lender,
Category :
Finance
:
Loans
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