Most Los Angeles Hard Money Lenders will tell you that a hard money loan is a real estate loan oftentimes secured by an actual real property. A majority of hard money loans are short-term loans of 1 year or less.
However, there are key differences between a hard money loan and a regular conventional loan made by institutions such as bank or hedge funds.
Hard money loans, also called private money loans, are made by private investors or a group of private investors. The criteria the Los Angeles Hard Money Lender uses also differs in a hard money loan.
Most institutional lenders based their lending decision on the qualifications of the borrower’s ability to repay the loan.
Los Angeles Hard Money Lenders will mainly focus on the value of the property to decide whether to lend and how much to lend. They will look at a borrower’s qualifications, but will mainly use the property or the deal as their main consideration.
The essential security is the property itself. The Los Angeles Hard Money Lender must be ok with the value of the property prior to choosing how much to actually lend.
Los Angeles Hard Money Loan Experts say the value is usually figured out by an independent appraisal. Generally, a Los Angeles Hard Money Lender will loan up to 70 percent of the property’s value.
The Key Advantages Of Using A Hard Money Loan
Most Los Angeles Hard Money Lenders will tell you that Hard Money Loans are very expensive in both the interest rate and the fees charged compared to conventional loans.
Still, there is an edge to utilizing a hard money loan. Most Los Angeles Hard Money Lenders will tell you that these loans are often more easily available, when funds are tight with traditional loans.
Los Angeles Hard Money Loan Specialist say that hard money loans are also quick to close and with less paperwork. This ultimately gives an opportunity to real estate investors to quickly take advantage of good deals prior to other investors taking action on them.