As more people choose to go the hard money lending route versus dealing with the hurdles of a conventional loan, prospective borrowers must do their homework and avoid common mistakes. Let’s explore two of these.
For starters, borrowers should have a solid foundation of how much money they need to borrow. Many private loans are based solely on interest. This means that borrowing more money than necessary will result in having to make larger payments. Furthermore, because hard money loans often use the property as collateral, there is a greater risk of the borrower losing their home or commercial property. Then again, borrowing too little may result in not having the funds to renovate a property for fix and flip purposes.
Speaking of interest rates, do keep in mind that hard money lenders assume a significantly greater risk than a traditional lender as they are using their own funds to provide the money to you. Hence, interest rates are higher. However, don’t be deterred by the higher interest. The money can be provided to you in hours versus days or weeks and you can typically work out a shorter payment plan with greater flexibility in terms.
This update is by hard money lending Miami company Monroe Funding Corporation, a direct equity lender serving clients throughout Central and South Florida. We specialize in first mortgages on non-owner occupied residential and commercial property investments as well as real estate loan options. Our fast and flexible loan programs get you to the closing table quickly and professionally. For more information on hard money lenders Miami or hard money loans Miami, please call 954-816-0388 or fill out our application.