The current market trends and interest rates are an indicator that a growing number of borrowers might be looking for private money loans. In fact, equity based loans are in high demand in parts of the country. With a property purchase that provided immediate equity, for instance, private money loans can help borrowers make necessary renovations or improvements before reselling the property for a significant profit. From hard money loans that come with high interest rates, but are intended for short term loans, to other kinds of financing available, both commercial and residential loans allow investors to reach their dreams.
Consider some of these numbers about the loans that private lenders offer to their clients:
- Hard money deals are often the best option for loans that will have a quick turnaround, typically within seven to 14 days to process.
- Hard money interest rates can start at 15%, 18% or even higher, as a result, these loans offer higher interest rates and lower loan to value ratios.
- Many investors pay close attention to current financial trends and interest rates so they can make their property decisions when the market is most favorable.
- Private loans have a shorter term than traditional loans. In fact, the term length of these loans in typically five years. The payment or duration period for a private loan is significantly shorter when compared to the traditional loan which can usually go from one year to as long as 20 years.
- The investor is well protected because most hard money loans are secured by a property that has as much as 30% to 50% equity.
- The amount of home equity peope have increases as they get older, because the majority of people buy their homes with a 15-year or 30-year mortgage. The fact that home prices have increased over time leads to the fact that investment properties gain equity as the loan matures.
- $3.4 trillion was the total U.S. combined debt as of May 2015, according to statistics from the Federal Reserve.
Whether you are looking at construction loans, or you are interested in gas station, church, or rural property loans, you may find yourself looking at hard money loan rates as an option if you think that a capital campaign or a property sell will help you pay off the loan in a short period of time.