Hard Money And Fha Loans Are Easy To Borrow

By Author: Issac Gates
Total Articles: 186
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There may be financial problems which are needed to be solved urgently but borrowing loan from bank and other financial institutions may be cumbersome and time consuming. This is where Hard Money loans come into picture. This type of loan is taken to solve urgent financial crises and it is usually considered the last resort of lending money.

The Hard Money is provided by a group of lenders or private financial groups generally known as Hard Money lenders. The term ‘hard’ in Hard Money can be interpreted as the hard money lenders charge exorbitant rates of interest and there is a high upfront cost involved in it. These loans generally cost more than an average mortgage because the origination fees of these are really high. Hard Money loan is unique because of its characteristics like: a) they are provided by private lending sources, b) they have short interest terms of one to three years, c) an upfront fee is charged on closing before three months of the due date, and d) if the borrower fails to repay the loan the debt is cleared by the sale proceeds ...
... of the property.

Hard money loans are of two types: 1) hard money business loans and 2) hard money residential loans. These loans are provided on the basis of the estimated value of the commercial or residential property where the commercial or residential property serves as a security. The lenders are generally interested in properties like houses, hotels, office buildings, shopping complexes, hospitals and other such properties which generate income. However they also show interest in land acquisitions and bankruptcies.

People who have been refused mortgages by other financial institutions because of reasons like poor credit history, not competent to repay the loan and other such reasons go to the hard money lenders as they are their last hope. These lenders are looked upon as saviors by those also who are unable to repay their mortgages and fear foreclosure.

Federal Housing Administration is abbreviated as FHA Loans. These loans provide mortgage opportunities to those people who have poor credibility. FHA Loans can provide the borrowers with many advantages over conventional loans like loan guarantee program, low down payments and easy qualification standards.

1) FHA Loans are beneficial because they require very low down payment as low as 3 % which is much higher in case of conventional loans. Moreover, in FHA loans this down payment can also be a gift from a relative or any non-profit organization.

2) The standards followed by the FHA loans are not as strict as in case of conventional loans.

3) Mortgage insurance is essential in both conventional as well as FHA loans but in case of conventional loans the mortgage insurance is cancelled when the borrower has 20% equity whereas the FHA insurance continues till the life of the loan.

Therefore, it is clear that Hard Money and FHA Loans are easier to borrow and have advantages over conventional loans. You can learn more about hard money lending by researching on the internet.