They may ad points!
Typically, interest rates of 10 to 20% per year are common!
Many want an equitable interest. These will vary based on the size of the task and the agreed upon contract.
Hard moneylenders are collateral based and typically require first position on the property.
To boil it down "A hard-equity loan is flexible and quick. Because most hard-equity lenders are private individuals and not large multistate lenders, they have more flexibility. They can also close more quickly, usually in as few as one to three days. Moreover, most take a quick look at the real property. "
Hard money is not the only way to used "Creative Real Estate Investing" but can be a great source of funding for you to get the deal or you can use some of the other methods listed below:
No-doc and low-doc loans.
Seller-carried second mortgages.
Land contract. Called "contract for sale" or Owner finance.
Credit cards.
Retirement accounts.
Friends and family.
Note buyers.
Get a loan on other property.
Partnerships.
Just to name a few!
There are many creative hard-equity programs and techniques such as:
Low beginning interest rate = Hard-equity loans have higher interest rates than conforming loans. A hard-equity loan, however, can have a lower beginning interest rate for a distinct period, from three months to five years. With a reduced payment for a time period, so you can catch up with other bills.
Long-term loans = Most hard-equity loans are made for five years. The monthly amortization duration may be for 15 years or 30 years, or it may be interest-only. Hard-equity loans can also be for longer terms, such as 15, 20, 30 or 40 years with no balloon payments.
No payments for a time duration = Sometimes you need a break from manufacture monthly mortgage payments. This agenda may allow you not to have any payments for a whole of days at the beginning of the mortgage. This can range from 60 days to the first year. Alternatively, you can have a provision that defers one or more monthly payments to the end of the mortgage. This allows you to use the money for other debts.
Tailored payments = Most mortgages allow for equal monthly payments for the entire mortgage. At maturity, the mortgage balance is zero or a balloon payment is required. Hard-equity mortgage payments can be tailored to satisfy your needs rather than the lender's matrix. If you have seasonal employment, then the payments can be larger during the "feast" duration and smaller during the "famine" period.
Loans with a lump-sum payment = You may advantage from having one lump- sum payment at the end of the mortgage. Use this agenda if you are likely to receive a large sum of money in the future. On these loans, the interest accrues, and the accrued interest and the necessary are due at maturity.
Second and third mortgages = Hard-equity loans can be a first, second or third mortgage. As long as the loan to value (Ltv) and the first-rate mortgage to subordinate mortgage ratio.
Wrap mortgages = The advantage of a wrap mortgage is that underlying first mortgage is ready when the wrap mortgage is satisfied. The advantage to lenders is that they are assured that the first mortgage will be paid. The interest yield on the transaction also can be enhanced.
Cross-collateralized loans = In many cases, the branch property does not have enough equity to reserve the proposed hard-equity loan. But you may have other real property to pledge as supplementary collateral. With the supplementary property, a hard-equity lender will close the loan because the collateral is adequate. Sometimes, assets other than real estate are acceptable.
Lines of credit = A hard-equity line of credit can be established more admittedly than a line of credit at a bank. The hard-equity line of credit can be used and repaid based on needs. It provides money that you can borrow and repay repeatedly under the terms of the mortgage. The interest on the mortgage would be payable monthly. The borrowing and repayments could continue until the mortgage matures.
Future advances = Often, a loan closes and you need more money soon after. Some costs can be eliminated if the first closing takes into list the inherent need for supplementary money. The mortgage can supply for a future develop from the lender for an supplementary whole that is agreed to at closing.
Portable loans = When you sell a home, most generally buy a new home. Both homes probably have a mortgage. If the mortgage could be transferred from the old property to the new property, you can save time and money. A hard-equity lender may let you change the mortgage from the old property to the new property.
Combination mortgages = Hard-equity loans can be as creative as you can make them. A hard-equity loan may comprise elements of two or more of the above techniques.
I advise you read "How To Be A victorious Hard Money Borrower" Download your free copy at [http://trice84.tripod.com/gifts/Jones0804.pdf]
A great hunt tool for "Hard Money Loans" can be found at:
http://www.scotsmanguide.com/default.asp?Id=1223
Good luck on your success as a real estate investor!
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