Can I Receive a Hard Money Loan with Bad Credit?
Since hard money loans offer quick short-term funding, your credit score often isn’t considered. The lender approves your loan based on the value of the property you’ll be using as collateral. Because your credit score doesn’t affect your loan, you may receive your funding in days – not weeks – unlike traditional loans through conventional lenders.
Can I Refinance My Loan?
Most lenders give you the option to refinance your hard money loan, and the process is similar to refinancing any other kind of loan that you have. However, depending on the terms of your loan, the hard money refinance process may differ in some ways. Before signing any contract, you should discuss hard money refinancing options with your loan provider.
Actual Cost Associated With This Loan
Now we’re getting down to the juicy facts! Avoid the most common mistakes in calculating the actual cost associated with hard money loans. This requires some expertise. Many people focus solely on the interest rate charged on the loan. It’s important to consider other costs in your calculations before agreeing on a lender.
Here are some of the costs that may be associated with your loan:
Interest Rate:Interest rates on hard money are higher than traditional loans, but the loan term is much shorter. It’s wise to consider the actual dollars that will be paid during the term of the loan, rather than the APR.
While there are loans available for less, the average APR tends run between 10-15 percent, depending on three things: the lender, the property and the borrower’s qualifications.
Points:Points are calculated as a percentage of the loan amount. This is the charge for originating the loan.
With most lenders, points can vary between 2-4 percent of the total loan amount. The actual points charged on your loan may depend heavily on the loan-to-value (LTV) ratio of your deal, the interest rate charged and the risk associated with the loan.
Processing and Underwriting Fees: Lenders typically charge a fee to process the loan application and documentation in order to underwrite the loan.
Appraisal Fee:Typically the borrower pays a fee for an appraisal by a licensed appraiser.
Referral Fees:If you were referred to your hard money lender by a REALTOR® or broker, a referral fee might be added to the cost of your loan.
Pre-Payment Penalties:Check the fine print for fees charged for paying off loans early. Some, but not all, hard money lenders charge a pre-payment penalty.
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