San Francisco Hard Money Loan

San Francisco Hard Money Loan
If your current financial position is not sound and you urgently need money for working capital, or to buy a house, conventional borrowing strategies may not be of much help. Most conventional lenders are hesitant to lend money to people in distressed financial situations such as impending foreclosure, bankruptcy or arrears on existing mortgage.

San Francisco hard money loan can come to your aid in precisely these situations.

What is Hard Money Loan?

San Francisco hard money loan is usually a ‘loan of last resort’.  It is a kind of asset-based financing, mostly prevalent in real estate, where a lender loans money which is typically secured by the value of real estate. The money is loaned if you have the backup of any property or asset.

San Francisco hard money loans are similar to bridge loans because they have a similar cost to borrowers and criteria for lending the money. The most important difference between a hard money loan and a bridge loan is that bridge loan is a loan issued temporarily to finance properties that are in transition and do not qualify for traditional financing, whereas in hard money loan, the money is loaned even when the borrower is severely financially distressed, perhaps even under the threat of bankruptcy. Both these loans have a high interest rate.

Banks or other financial institutions usually do not offer such loans.  Therefore, private individuals often do it in their areas. The loan is secured by the value of the asset and almost 60-70% is given as loan. A property worth $100,000 can get you a San Francisco hard money loan of up to $70,000.

What do you need to know about Hard Money Loans?

• These are very short-term loans given with the backup of any asset, usually property.
• They are the most effective choice in turnaround situations, poor credit and for short-term financing.
• Private individuals or moneylenders deal with such loans. The terms and conditions of the deal depend upon the lenders.
• It is often done under strict terms and conditions, as the whole deal could be risky for the lender.
• You can lend up to a certain percentage usually 70% of the fair market value of the property or asset.
• The interest rates can be somewhere between 12% – 20% annually.
• The term period could start from 6 months and can go up to a few years.
• There is a closing cost or a fee that has to be paid to use the hard money. It varies from 2–10 points depending upon the lenders.

Why San Francisco hard money loan?

Hard money loans are great for beginner investors who may not have a good enough score to qualify them for traditional loans. Also, if you need to purchase something quick or want to creatively finance a property, hard money loan may be a good option. Real estate investors may borrow hard money to buy a property, fix it up and sell it back for a profit.

It is always safe to do your research before you choose any Hard Money Lenders. Beware of Loan sharks. If you are in a financial crunch and have exhausted traditional loan options, the first option is to approach your friends and family, or even a neighbor, for a hard money loan. Talk to a mortgage company who may be able to give you references, and search online or in your locality. Sometimes credit unions also offer hard money loans, and of course there are private lenders who specialize in bailing you out of tough financial situations by providing hard money loans. There are also nationwide hard money lenders, but they usually require a credit check. Shop around till you find the best lender and you may be out of your financial woes sooner than you realize it.