How do hard money loans work?
Hard money loans aren’t available to everyone. Typically, they can only be used for investment purposes. If you plan on using a loan to buy your own home, then it’s unlikely you’ll get approved. loans are typically given for a term of 6-24 months only. While it’s possible to get a loan for a period of time greater than this, it’s unlikely to be cheap – or easy. Most lenders will expect a balloon payment at the end of the loan for the principal and interest. Rather than making payments each month (like a traditional lender would expect), this gives you greater freedom. is great if you a short term loan that is approved fast.
Most traditional lenders are ok approving 80-90% LTV loans. In contrast, lenders expect you to bring some of your own money to the deal. Each lender will require you to bring at least 20-30% of the overall loan amount to the table. Most lenders lend at around 50-60% LTV. Anything greater than that will generally involve greater scrutiny.