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Bad Credit Loan Options

A hard money loan is often a specific kind of asset-based loan financing when a borrower receives funds secured through the value of a parcel of property. Hard money loans are normally issued at higher interest rates than conventional commercial or residential property loans and are also almost never issued by a poster bank or some other deposit institution. Hard funds are similar to a bridge loan which often has similar criteria for lending in addition to cost on the borrowers. The primary difference is always that a bridge loan often refers to an advertisement property or investment property which might be in transition and yet be eligible for traditional financing, whereas hard money often identifies not only an asset-based loan that has a high rate of interest, but possibly a distressed financial predicament, like arrears within the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many hard money mortgages are designed by many, generally of their local areas. Usually the credit standing of the borrower makes no difference, since the loan is secured because of the value in the collateral property. Typically, the ideal loan to value ratio is 65-70%. That is, should the property is worth $100,000, the loan originator would advance $65,000-70,000 against it. This low LTV provides added security for the lending company, when the borrower won’t pay with to foreclose about the property.

Commercial hard money

Commercial hard funds are similar to traditional hard money, but may often be more expensive because the risk is higher on investment property or non-owner occupied properties. Commercial Hard Money Loans will not be subject for the same consumer loan safeguards as being a residential mortgage could possibly be in the state the mortgage is distributed. Commercial hard money loans are sometimes short term and thus interchangeably termed as bridge loans or bridge financing.

[edit] Commercial hard money lender or bridge lender programs

Commercial hard money lender and bridge lender programs are much like traditional hard cash in terms of loan to value requirements and rates of interest. A commercial hard money or bridge lender in most cases be a strong traditional bank that has large deposit reserves plus the ability to create a discretionary decision over a non-conforming loan. These borrowers tend to be not conforming for the standard Fannie Mae, Freddie Mac or any other residential conforming credit guidelines. Since it can be a commercial property, they generally do not adapt to a standard commercial loan guideline either. The property or borrowers could be in financial distress, or a poster property might not be complete during construction, have its building permits in position, or just be in good or marketable conditions for virtually any number of reasons.

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