Hard Money Lenders Plus And Minus
It seems now that many properties are being purchased for cash. Sometimes that cash is really money from a "Hard Money" lender. What is a "Hard Money" lender? They are private individuals and entities (not banks) that loan money. Usually their requirements are:
FICO score 600-700
Corporation Status (not individually to people)
A factor, not really an interest rate.
These requirements make it easier for the "Hard Money" lender to foreclose in the event of a default. Allow for adequate worst case risk and finally keep clear of banking regulations. It is very important that a borrower understands the true terms of the loan. A lender may speak of a 10% loan but that is really a 10% factor. As an example if you borrow $100,000 you might pay 4 pts. 4pts means $4000 (4% of the principle). The lender will then expect you to pay back $104,000 plus 10% ($114,400) back in 6 months. This is not a 10% APR loan.
The advice today....be careful.
Next blog: Confessions of Judgments and how they can lead to financial ruin!