Hard Money Lending, Hard money Lender, Pitbull Mortgage

Hard money lending companies offer real-estate backed loans. The loans are short-term and provide funding based on the value of real estate which has been collateralized. Because hard money borrowers do not need to conform to bank standards, the lenders have much higher interest rates.

The loan-to-value percentage, type of real estate, and minimum loan size will vary by lender. Hard money loans are expensive because the lender is at high risk. Since the lender does not require the borrower to have a good line of credit, the chance of default is high. Hard money loans are used as a last resort by people who do not have acceptable credit or other required documentation by a bank.

The collateral for the loan is the real estate. However, other assets can also be combined to count for collateral as well. The loan amount is based on a ?Loan to Value Ratio,? or LTV, which the lender sets in place. Because the loan is only a percentage of the total value, it is common for other properties to be offered as well to increase the value of the loan. This arrangement is known as cross-collateralization.<

Lenders may work in a regional or nationwide market. Some work with the assistance of a broker who will be given a percentage of the loan and in exchange takes care of the necessary documentation. It is not uncommon for lenders to deal directly with their applicants. The fees which lenders pay vary. Some may charge application fees or prepayment penalties. There are several online directories which serve to connect hard money lenders to borrowers.
If you would like more information on hard money lending, contact the Pitbull Mortgage School by calling 858-736-7788 today.