The short term loan secured for real estate is the hard money loan which is funded by the private investors rather than a conventional lender like Bank. The interest rate of the hard money loan is higher compared to the traditional ones and usually the terms are around 1-2 years. The loan term can be extended as agreed upon to longer terms till 5 years. One can pay the interest monthly or with the principal amount at the end of the term.
The borrower can acquire hard money lending according to the value of their subject property. The loan is acquired on the borrowers already existing property or hard assets which are used as a collateral. It does not matter whether the credit score of the borrower is good or not.
The lenders of the hard money are mainly concerned with the borrower’s property value and did not give much importance to the borrower’s credit. A bank or a Credit Union has a lot of rules and requires a good credit score by the borrower. Thus not all borrowers prefer the conventional financing method.
The borrower can get a hard money loan on any type of property like single-family residential, multi-family residential, commercial, land, or industrial. There are some hard money lenders who specialize in one specific property type, for instance only residential property. They do not give loans on other property because they do not have experience regarding the same. Each hard money lender has a specific niche. This can be known after a meeting with the hard money loan lender.
