Hard Money Lenders – What you need to know

Residential hard money loans may be lethal weapons in the hands of an inexperienced real estate investor. It is great to know that we no longer have to be at the mercy of the traditional mortgage companies and credit unions in order to invest in a house. But hard money is NOT always the best answer for making real estate investments.

Regardless of your financial situation you can take advantage of something called a business line of credit.

The Property is not the One in Charge with business credit.

When you are dealing with residential hard money loans the value of the property is of primary importance. The property determines if you can get hard money. But with business credit you are free to make any kind of deal you want and get good terms without the rigors of hard money qualifications.

This is in sharp contrast to conventional lending institutions such as mortgage companies that base their lending decisions on items such as a person’s credit score, yearly income, and other factors which revolve primarily around the borrower.

With simple business lines of credit you have an excellent shot of financing your property quickly and effectively through the use of nothing more than a business name that is registered with your state.

The Money is not free.

Normal interest rates will be charged on business credit but no points of application fees are needed unlike hard money loans.

Let’s face it, the lenders who will lend you money based on the value of your property need to also make money. Residential hard money lenders earn high income by charging borrowers a substantial interest rate. They are the loan sharks of the real estate world.

It is not unheard of for hard money lenders to charge as much as 15 percent for notes of this type.

While residential real estate is a great investment opportunity in today’s buyers market and with the continued population growth
hard money loans are expensive compared to business lines of credit. Real estate can easily be purchased using business credit which is tax deductible when the interest costs are part of a business investment.