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About Hard Money Construction Loans

New construction hard money loans are asset-backed loans collateralized by real estate. The builder who takes out such a loan is typically unable to secure a conventional loan from a bank, a common issue in today's construction market. For that reason, he or she is generally willing to pay a higher rate of interest to a private money lender in order to close the transaction. Construction loans often include funds for purchasing raw land as well as for building costs, which are paid out in periodic "draws" once the builder has met some pre-defined milestones. Due to the higher risk associated with these types of loans, the lender will generally require the borrower to contribute some of their own cash or equity to the deal. Additionally, borrowers will often have input into the project plans, particularly relating to the timelines and budgets.

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5 Steps in Obtaining a Hard Money Loan

It may seem obvious, but nobody just googles the term "hard money loan" and gets the money they need for a home or remodel. There is a process to follow, as with any loan. The fact that hard money loans are faster and require less paperwork than a standard mortgage from big banks does not mean that...

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Legitimate vs Predatory Lenders

Anytime a borrower seeks out alternative or special financing, like a hard money loan, it is extremely important to do the homework. Everyone considering a hard money loan should know what to expect, how to evaluate the options presented and what kinds of documentation will be expected at closing. ...

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Documents in a Hard Money Loan

While hard money loans are known for funding faster than more traditional mortgage loans and they often require much less paperwork, there is still some paperwork and there will be a closing. It's a good idea to prepare, going in with an understanding of what will happen and what kinds of documents...

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