Hard money lenders are often referred to as a last resort by mortgage industry insiders. However, there are many situations where a hard money lender might be needed before traditional banks. Real estate investors who are looking to "flip" properties may also use hard money lenders.
Investors who find a property of great value may need fast and secure financing in order to buy, renovate, and then sell it quickly. You can check out this site to get loans from a hard money lender in California.
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A short-term loan from a hard money lender in California is a great option for anyone looking to flip real property. You can also structure the loan as an interest-only loan, which will keep your expenses low. The principal of the loan is paid back once the property has been sold by the person flipping it. Profits can be kept or reinvested in the next project.
A homeowner who is in foreclosure is another example of hard money. Most lenders won't lend money to homeowners who are behind on their mortgage payments. A hard money loan can be obtained by a homeowner facing foreclosure to stop foreclosure proceedings.
Hard money lenders also require that borrowers have at least 25%-30% equity in real property as collateral. This ensures that the lender is able to recoup their original investment even if the borrower defaults.