There are many types of loans available in today’s world. There are, for example, mortgage loans, refinance loans, student loans, and business loans, just to name a few. Most of these loans are acquired from the bank, or some professional lending company. And then there are hard money loans, a type of private lending that is somewhat unique to North America, as the term isn’t generally found anywhere else. Hard money loans refer to loans that are secured by real estate, the “hard” referring to the assets making the loan possible. If you’re looking into private lending t0 secure a hard money loan, there are some things you should know and this article will take a look at a few of them.
- The Money Can Come From Several Sources, But Not the Bank: One thing to know about hard money loans is that, unlike other forms of private lending, while the money can come from several sources, the money won’t be coming from the bank. Due to the nature of hard money loans, the money is typically secured from friends and family, professional acquaintances, or professional hard money lenders. But the money won’t, under any circumstances, come from the bank like other loans.
- They’re Typically Short-Term Loans: Another thing to know about hard money loans is that they’re generally speaking short-term loans. For example, a typical hard money loan term is six months to a year, which is pretty short if you think about how long it can take to pay back student loans. However, it is possible to get longer terms for hard money loans, in certain circumstances up to two or three years, depending on the lender.
- They’re Sometimes Known as Fix and Flip Loans: And finally, a third thing to know about hard money loans is that they are sometimes known as “fix and flip” loans. This is because, according toThe Balance, people who are in the business of fixing and flipping houses for a profit will take out these loans to allow them to purchase the property, with the subsequent sale aiding them in paying the loan back.
In conclusion, there are several things you need to know about hard money loans. They are private loans that typically come from private lenders and not the bank. Also, they’re typically short-term loans, generally needing to be paid back in a year. And finally, hard money loans can sometimes be known as “fix and flip” loans because they’re often taken out by people who are in the business of flipping houses. These are all things that you should know about hard money loans