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Hard money loans are made by lenders willing to accept greater risks than mainstream
mortgage companies and banks. In exchange for providing loans to borrowers who
would otherwise be turned down, hard money lenders charge higher interest rates.
"Hard Money" loans are made by private investors or mortage companies who are
more lenient and flexible about accepting risk, compared to mainstream lenders.
These loans are typically for borrowers who are purchasing a home under value
and do not want to put any money as down payment, or rehab loans where the borrower
can get funds based off appraised value rather than the purchase price of the
property.
If the property that you want to purchase doesn't fall within the categories
of guidelines followed by mainstream lenders, you might succeed by applying for
a hard money loan. Due to the additional risk, hard money loans carry substantially
higher rates and normally provide short term, rather than long term financing.
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