A hard money loan is an equity based loan that is used to finance the acquisition or development of properties. Usually, the target markets for a Los Angeles hard money loan are private realtors, corporations and sub-prime money borrowers who cannot meet requirements set by conventional financial institutions. Normally, no stringent guidelines that clients need to meet in order to qualify for loans. This is a fast solution to getting fast and creative financing.
Hard money loans process
To begin with, lending institutions require individuals to meet the tough guidelines in order to get financing. However, this is vital in order to ensure that the debtor does not default in payment. Hard money loans do not need to review most of the steps adopted by financial institutions such as reviewing the creditors past history on credit.
In addition to this, Los Angeles hard money loan borrowers are only required to own a minimum of thirty percent ownership of their real estate. Borrowers who meet this requirement are better placed. For those below this threshold, hard money lending firms are obliged to cross collateralize funds to other properties that borrowers have in any part of the country.
Normally, it only takes seven to ten days to process the hard money loan. This is because there is need to inquire is the property owned by the borrower has any liens and judgments attached to it. It also gives the firm time to process loans. Therefore, borrowers are advised to provide these conditions promptly in order to help in expediting the loan process.
Importance of refinancing your mortgage using hard money loans
First, refinancing the loan using hard money loans helps in budgeting one’s future finances. This is because most mortgages have high interest rates hence the need to reduce the loan amount significantly. This will help in relieving one the pressure that comes with paying mortgages.
Secondly, refinancing a mortgage using hard money ensures that one cuts down closing cost significantly. Typically, reducing this interest and closing cost is vital since a hard money loan has a longer period of repayment making it easier for one to plan their future finances. This gives borrowers a chance to view the impact of such loans to the future of their finances.
Thirdly, refinancing a mortgage using a hard money loan enables one get to a breakeven point in which they bought the home in the first place. It is unlikely for homeowners to reach breakeven point if the sell the home in order to recover their closing costs.
Benefits of hard money loans to new borrowers
To start with, most individuals cannot meet the tough conditions set by other conventional lenders. For hard money loan borrowers, no credit history is required. Only the proportion of ownership of estate one has is required.
On top of this, Los Angeles hard money loans have a shorter period of closing this loan. It is only under certain conditions, for example if the property has liens; it takes up to two weeks to get the financing. This helps one acquire property or make developments on them promptly.
Lastly, for those with distressed property, borrowers are required to submit such property to other investors. This is done on a pre-listing basis. This assists those facing bankruptcy charges.