DEAR BENNY: just what is a «hard money» loan? вЂ“Irene
DEAR IRENE: Technically, are difficult cash loan is that loan that is offered in return for cash, in place of to aid a customer in buying a residence. The latter will be called a «purchase money» home loan.
Hard-money loan providers try not to count on the creditworthiness regarding the debtor. Rather, they appear to your worth of the home. The lending company desires to be sure that in the event that debtor defaults, you will have equity that is sufficient the property in addition to the total amount of the mortgage. Properly, you’ll not get a difficult money loan of 80 or 90 percent loan to value; typically, they are going to cover anything from 50 to 70 % loan to value.
Such loans are believed «loans of final resort.» You may be forced to negotiate with a hard-money lender, who often are private individuals loaning money from their pension plans if you are unable to get a conventional loan from a bank or mortgage broker.