Even with all the reopening of towns across America, some households may find themselves stuck trying to emerge from the setbacks caused by COVID-19. If you find yourself falling into this category, you may be looking into all the different options to get a little extra money now, especially when handling real estate matters. Have you considered what a hard money-lender could do for you?
What is Hard Money Lending?
Hard money lending is a form of financing that is asset-based. The funds a borrower receives are secured by the value of a property’s equity. Interest rates are higher on hard money loans versus the loans that are secured by a financial institution. This type of loans are funded by private entities that are secured by notes to private investors.
It works the same way like any other loans. You continue to make principal and interest payments monthly on the amount you borrow. You will have a repayment term that you must adhere to, just like any traditional loan.
Facts About Hard Money Loans
Here are some of the traits that are indicative of hard money loans:
- These loans are broker protected
- Residential and commercial loans
- Stated loans
- Terms can range from 11 months to 5 years
- 1st, 2nd, and 3rd position on all properties
- No cash-out restrictions
- Past bankruptcy, short-sales, and foreclosures are okay
- Amortized and interest only programs
- loans can be approved within six to 24 hours
Getting Approved for Loan
This type of loan requires that you have equity in a property. Once a lender looks at the equity the property has, then they will begin the normal lending process. The amount you will borrow will be determined by the amount of equity, ability to repay, debt-ratio, and your long-term goals with the property.
Your lender should advise you on all the fine details of the agreement like interest rate, prepayment penalty, terms, cost, title issues, among other important loan details.
Check with a local lender to see if what your options are and how a hard money loan may be able to help with your COVID-19 woes.
How a Hard Money Loan Can Help in Times of COVID-19
If you have a property with equity, you may be able to use it to get a loan. During COVID-19, mostly when it was at its peak, you might have had problems handling all of your bills. If you are struggling to get a loan and need extra cash to help get you by during this pandemic, you may want to explore loans and see if you qualify.