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Have You Heard of These Hard Money Myths?

Posted by Brent on December 20, 2018

Hard money loans serve a specific segment of property owners and buyers, and like other forms of financing, they are not perfect for anyone. There are many myths about hard money financing which may keep some people away from them, when they may benefit from this type of transaction. Let’s review some of these myths and the truths about them:

Hard Money Myths

Hard Money Loans are Made out of Desperation

It may be true that some people use hard money financing because of incomplete or poor credit, but the fact is hard money is often used for commercial properties because of the relative ease of obtaining the loan, the rapidity of getting the money needed to purchase or improve a property, and the ability to free up accumulated equity in properties without having extensive delays waiting for conventional banks.

Hard Money Loans Always Have Higher Interest Rates

Hard money loans can have higher interest rates than a conventional loan, but hard money investors are accepting a higher risk than a conventional bank. The hard money loan is also processed much faster than conventional loans, allowing the borrower to start making money more quickly. This can offset the additional interest rate.

Hard Money Loans do not Require Up Front Cash

In fact hard money borrowers typically have to provide a larger cash payment at the start of their loan. Hard money investors use a loan-to-value ratio often capped at 65% of the assessed value of the property. This can be a lower cap than many conventional loans, thus requiring a larger cash down payment.

If you need to learn more about the advantages of hard money financing, or are ready to finance a property using hard money, contact AHL Hard Money Network today at 813-516-5210 for a consultation. Our investor network is ready to supply the financing you need quickly and with less stress than conventional lenders.

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