What is Hard Money?
Hard money is a type of loan that relies on an asset as collateral. In real estate investing, that’s typically the house you’re borrowing against. These types of loans are backed by the value of the house, not necessarily by the borrower’s credit history or other factors.
For that reason, though, these loans can still be risky. In most cases, hard money loans have lower loan-to-value ratios than conventional loans do.
Interest on Hard Money Loans
Interest on hard money loans is typically higher than it is on conventional loans. That’s one reason these are usually only short-term loans – and it’s why they can be immensely helpful to real estate investors who intend to buy a property, fix it and re-sell it.
What is a Loan-to-Value Ratio?
A loan-to-value ratio, commonly called an LTV ratio, is an assessment conducted by financial institutions – including hard money lenders – to determine how risky a loan may be.
Large lenders, including banks and mortgage companies, are often reluctant to accept risky loans. However, in some cases, hard money lenders are willing to extend credit for up to 65 percent of the loan-to-value ratio on a house.
Who Needs Hard Money Loans?
Many people are able to benefit from hard money loans, including real estate investors, developers and others. Typical uses for hard money loans in Atlanta include:
- Bankruptcy bailouts
- Emergency cash-out
- Foreclosure bailouts
- Self-employed borrowers
- Transactions that conventional lenders can’t perform
Could You Use a Hard Money Loan?
If you need a hard money loan for any reason in Atlanta, call us at 404-814-1644 or get in touch with us online. You can also learn about our hard money loan criteria, the hard money loan process or apply for a loan right now.