However, in my past experience as both
a hard money broker and a hard money lender, most private or hard money lenderslook at the combination of certain criteria which paint a big picture of how
much risk your loan request represents to them.
This includes your ability to repay the loan, the likelihood that you
might default,if the property's
value will hold up,and in the worst
case scenario, a foreclosure.These criteria are combined to
determine the risk involved for the hard money lender and if they can recoup
their investment plus fees and costs incurred in the event that you default and
they have to foreclose.
There are different standards and
strategies that real estate investor's use when evaluating properties. In order
for us to get involved with a property, an individual should know that there
are some advantages of hard money home loans which are:
– It usually entails in lower monthly loan
– The home owner can pay off the earlier mortgage on
– A home Mortgage loan can be taken if the homeowner
needs additional money
– It helps the homeowner get a better interest rate as
compared to what he was paying on the existing home mortgage loan
– A Home loan remortgage can also help him consolidate
– He can pay of some large expenses like his children’s
– He can pay off other higher rate debts like credit
card debts, car loans etc.
When making a loan, a bank and hard money lenders
both have different options when it comes to determining the value of the
property. A hard money lender takes a very conservative approach to property value.
For Example, the appraised value means nothing to the hard money lenders.
Plenty of hard money mortgage programs allow borrowers to buy houses with
little or no money down, but they usually require private mortgage.