The hard money lenders are in business because of the rehabbers that needs the quick money for the renovation project. The money is mostly used to pay contractors, purchase the property and to cover any expense that may emerge. The borrowers are able to access the liquid money faster than the conventional types of lending. The article highlights the essential details about the harmony lending.
Short Term Loans
You will be required to pay the amount within the shortest time. Most of the companies extend their periods of lending up to three years. The lenders expect the borrowers to pay the interest rates during the repair period and clear the final principal after the house gets a new customer. The amounts that you can qualify for are determined by the size of the project that you have.
The lenders have no complex documentations during the applications. The lenders have quick processing and approval processes ensuring that you get your money within the same day of applications. The rehabbers are likely to have a quick project hence more benefits when they are able to receive the money on a single day. Your finical history will not be used and the value of the property after the renovations will influence the amounts that will be disbursed.
The documents that will be required will depend with the company but some of them are standard. You are likely to get a higher financing when you come with the breakdown of your budget. The documents that are important includes the appraisal certifies, the recent tax returns and the repair costs of the building.
Most Lenders Cap Their Financing At 70%
The maximum financing of the property is influenced by the qualifications of the investor. The standard amount of financing does not extend for more than 70% of the value of the property once the repairs have been done. The 70% financing ensures that the financier is protected from the defaulting risks.
The 30% Capital From The Borrower Shows Commitment
The 30% capital from the borrower is necessary to the financiers to show that as a borrower, you are also committed to your project. If the borrower has no substantial savings, they can consider the business credit cards to ensure that they get funding.
The hard money lender makes the work of the real estate developers to be easy. The value of the property determines the amounts that the borrower gets. Different companies are offering these types of services and you need to ensure that you are aware of their terms. The hard money lending is flexible and they stretch their services up to the commercial buildings.