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Hard Money Lending Explained_ When a Hard Money Loan Makes Sense.

Understand hard money lending and its benefits. Explore when a hard money loan is ideal for your financial situation and learn about rates and lenders.

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Hard Money Lending Explained_ When a Hard Money Loan Makes Sense.

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  1. Hard Money Lending Explained: When a Hard Money Loan Makes Sense A Guide to Understanding Hard Money Loans

  2. What is Hard Money Lending? • A hard money loan is a short-term, asset-based loan secured by real estate. • Offered by private lenders or investors, not traditional banks. • Approval is based on the property's value, not the borrower’s credit. • Typically used for real estate investment and quick financing.

  3. Key Characteristics of Hard Money Loans • Short-Term: Typically 12 months to 3 years. • Higher Interest Rates: Ranging from 8% to 15% due to higher risk. • Fast Approval: Loans approved in days based on property value. • Collateral-Based: Property serves as security for the loan.

  4. When to Consider a Hard Money Loan • Real Estate Flipping: Quick financing for buying and renovating properties. • Bridge Loans: Temporarily finance a property purchase while waiting for a sale. • Emergency Funding: Useful when urgent financing is needed. • Credit Challenges: Suitable for borrowers with low credit but valuable real estate.

  5. Pros and Cons of Hard Money Loans Pros: • Fast access to capital, sometimes within days. • Flexible repayment terms based on borrower needs. • Less focus on credit history. Cons: • High interest rates (8% to 15%). • Short loan terms (1 to 3 years). • Risk of losing collateral if the loan defaults.

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