There are different kinds of hard money loans and they are arranged according to the objective of the loans. Some are commercial, constructions, land acquisitions, bridge, residential and development. The word hard money sometimes refers to the difficulties in moving in for such type of loans.
As we know that land is significant for any type of constructions or real estate developments. Most of the traditional lenders like banks, loan and pension funds, savings associations are not showing their enthusiasm on providing money for such type of loans.
So, developers therefore come in touch with the loan specialists who are able to find out the investors who have the ability to make out theses difficult loans.
Hard money loan lenders most of the time are the group of specialist who could provide money for the short term land development loans. They generally provide loans for the small percentage of rate than other lenders. Additionally the loan terms are usually worse than the conventional lenders.
Most of the hard money lenders sometimes make raw loans and place them with private money sources. They would also make their loan decision based on the asset valuation rather than the borrowers. This would make these loans easier to receive but harder to service.
However, the raw land loans deals are generally time sensitive, as the lenders are used to make fast decisions and they immediately certify the borrowers and guarantee that they have the capital and give their decision within 1 to 2 business days.
The borrowers who are reaching out for land loan are essential to follow certain strict norms and guidelines which are set by the private lenders. Some of the lenders would not finance the purchase of the foreclosed properties or the properties which is burden by judgments or liens.
Since borrower use brokers to guide through the list of limitations in order to find the best hard money land loan lender. Hence, these land loan lenders are normally used by the borrowers when the risk is steep yet there are adequate collateral securities to blanket these extremely high risks.