As you know, the normal banks have seriously tightened their conventional mortgage money. Many borrowers are now turning to hard money loans to facilitate their borrowing needs. We’ve witnessed a massive resurgence of borrowers requesting this type of hard money financing.
Hard money loans have always carried a stigma of good vs. evil. On one hand, they are expensive but on the other hand, they can facilitate great investment returns or save a home from foreclosure. Interest rates of ten percent and higher are a normal starting point for these costly loans. Lender origination fees are also high and typically start at 5 points (5 percent of the total loan amount borrowed.)
For many borrowers in these difficult financial times, this type of loan can be a wonderful resource. Instead of waiting weeks or months on a bank that will never fund, hard money borrowers know that their hardmoney loan will fund quickly and easily! With traditional lenders ailing from sub-prime losses, they have all nearly restricted their lending guidelines so that no one qualifies. With the advent of the hard money lender, comes relaxed guidelines and a more common sense approach to lending.