What Are Hard Money Lenders?

This BLOG On What Are Hard Money Lenders Was Written By Gustan Cho NMLS 873293

What Are Hard Money Lenders?

  • Hard Money Lenders are lenders who lend primarily based on the assets rather than the borrower.
  • Hard Money Lenders do care about borrowers financials and experience in real estate, however, their main concern is the property they are lending against.
  • Borrower’s credit only plays a role when hard money lenders evaluate risk and good credit means lower interest rates.

Importance Of Equity With Hard Money Loans

Private and Hard Money Lenders need you to have a property with lots of equity. 

  • Real Estate Investors who are purchasing a property, 25% of the purchase price is typically the low amount for a Hard Money Lender.
  • Hard Money Loans For Real Estate Investors close in 30 days or less.
  • The more money a real estate investor puts down on a hard money loan, the happier the hard money lender is.
  • Why is that?
  • The more money investors puts down on a real estate purchase, it shows the borrower has more skin in the game and the less risk the lender has.
  • A 35-40% down payment is probably much more common.
  • Hard Money Lenders are not regulated by mortgage regulators and hard money and private money lenders cannot lend on owner occupied residences.
  • Hard money and/or private money loans is normally for investors of real estate properties.

Residential FHA Lenders Versus Hard Money Lenders

There are many rules and regulations when it comes to qualifying for FHA Loans since all FHA insured mortgage loans are guaranteed by the government against default of the borrower.

  • Home buyers can get a FHA Loan with as little as 3.5% down payment with very low mortgage rates since the FHA Lender is insured in the event if the borrower defaults on his or her FHA Loan.
  • This is not how it works with hard money and/or private money loans.

What Are Hard Money Lenders & How Do They Qualify Loans

Hard Money and Private Money Lenders typically have 2 really strong safeguards when they lend:

  1.  A property with a lot of equity
  2. A borrower with a really good, common sense, well thought exit strategy.
  3. For example, the borrower may be buying, rehabbing, and flipping a property with a $100,000 possible profit margin in a hot neighborhood.

Chicago Hard Money Lender

Capital Network Group Inc. is one of the nation’s most reputable hard money and commercial lenders and is known by many as a one-stop-lending-shop because there is no hard money or commercial loan they cannot do.

  • The above is just one example.
  • You have to think like you are Hard Money Lender or Private Money Lender before you Google Hard Money Chicago, Los Angeles, Miami, Denver, New York, Las Vegas, or La La Land, because everyone lends in La La Land.
  • So if you want a Hard Money Loan in Chicago or one or any other city, read what the lender states they do.
  • If you want a Hard Money loan in Chicago, and you need a 100% of the future value of your property, Google I need a Hard Money Loan in Chicago but I live in La La Land.
  • Remember that you need to be careful when choosing a hard money lender because they are not regulated like FHA Lenders or residential lenders who need to be licensed. 

About The Author And Gustan Cho Associates

Greg Kewin is the Area Operations Manager at The Gustan Cho Team @ Gustan Cho Associates. Greg Kewin is also a commercial lender with Capital Network Group Inc.  Greg Kewin brings almost three decades of both commercial and residential lending to Gustan Cho Associates and Capital Network Group. The Gustan Cho Team at Gustan Cho Associates consists of commercial and residential mortgage professionals and real estate investors. For more information on hard money loans, please contact us at 800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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