One thing about hard money loan, or better known as private loan money, is the fact that this is a type of loan that can only be attained from sources that are specializing in the construction of the said loan. Not only that, there goes the fact as well that a hard money loan is a kind loan that consist of a first mortgage on a residence, leading to the creation of a hard money residential loans. Always bear in mind that there are several important identifying factors that are involved in hard money loan.
One example of which is the first mortgage, which we have already stated earlier on in this article. Since the borrower's credit will not matter as much as the equity in the property does, a first mortgage that is in effect will stop any potential loss of the property, most especially if the borrower has another loan before the hard money loan. If you are wondering why the credit history of the borrower will not matter for hard money loan, well, that is due to the fact that the lender looks to the property for its security, not to mention that the lender is being paid dearly for the chance that they take by basing all the money on the value of the property alone.
There are other things that you must know when it comes to hard money lenders Atlanta such as the fact that they are normally charging really high interest and also, high points too. In some cases, if the property of the person applying for a hard money loan is secured enough, the high points will be rolled into the actual loan. The truth of the matter is that the loan is actually not paid in the normal principle plus interest, instead, they are more likely to be paid with interests only, with a balloon at the end of the specified loan period. This only means one thing and that is the fact that the borrower is paying interest on interest and since points are interest and since mortgages are calculated with the inclusion of points, this only goes to show how every payment the borrowers make is paying interest the interest alone hence, interest on interest.
It is safe to say that all hard money lenders Atlanta out there are looking for a legit and credible borrower thus, they see to it that a careful appraisal is done to their property. They are doing this because they want to protect themselves from the possibility of getting deceived by the borrower or from having to suffer from significant loss if they cannot pay them back. This is their way as well to ensuring that their interests are protected.
