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What Is a Hard Money Loan and How It Works?

A hard money loan refers to a type of loan. However, what makes it different from other types of loans is that it’s secured on real property. Moreover, they are considered short-term bridge or last resort loans. Basically, they are used in different real estate transactions. The lenders are either companies or individuals, not banks. Read on to know more.

Key Takeaways

Given below are some of the salient features of these loans.

Primarily, they are used for real estate transactions. And this money comes from a company or individual instead of a bank.
Typically, this type of loan is granted for a short period of time. The purpose is collect money quickly at a lower ration of LTV and higher cost.
Since these loans are not executed traditionally, the funding time is reduced is usually quite quick.
It’s interesting to note that the terms of these loans are negotiated between the borrower and the lender. Plus, these loans use the real estate as collateral.
Although repayment may result in default, they still leave a lot of profit for the lender.
How does a Hard Money Loan Work?
Usually, the terms of hard money loans are based on the value of the real estate, not the borrower’s creditworthiness. Since conventional lenders like banks are not the lenders, private lenders or firms are most interested in this business.

Also, these loans may be a good choice for property flippers who have plans to renovate a property and sell it again. Here you may be thinking the cost of this type of loan is quite high. But the good thing is that the extra cost is offset by the loan will be paid off rather quickly. In most cases, the loan is granted for a period of 1 to 3 years. Aside from this, they offer a lot of advantages as well.

Aside from this, this type of loan is considered a great investment as well. You can find a lot of people out there who have done this business and are happy with the practice.

Special Considerations

Typically, unlike the bank financing or the financing programs offered by government, the cost of these loans is quite higher for a typical buyer. However, this cost reflects the higher risk that the loan granter bears. But the great thing is that the extra cost is a worth it as the money is available quickly. The approval process is less stringent and the repayment schedule is also quite flexible.

Also, these loans can be a great choice to deal with turnaround situations. For instance, if you need money quickly for a short-term financing but you have poor credit score, you can give it a go. Since the amount is issued pretty quickly, you can use the funds to stave off a foreclosure, for instance.

Pros and Cons

Now, let’s take a look at some pros and cons of hard money loans.

Pros

First of all, the approval process is quite faster unlike the process of mortgage or a conventional loan. The thing is that private lenders are interested in this type of business as they can make decisions quickly without running a lot of checks. In other words, they won’t check your credit history. These are the steps that slow down the process and make the borrower wait for weeks.

Typically, these investors only care about the repayments. Plus, they have the opportunity to resell the property in case the borrower fails to make payments and becomes a defaulter.

Another advantage is that the lenders don’t apply the conventional underwriting process. Instead, they evaluate all of the cases one by one. Often, applicants can sit with the lender and discuss the repayment schedule based on their circumstances. Aside from this, borrowers can take advantage of a lot of opportunities during the time they have. So, this is another great advantage you can enjoy if you go for this option.

Cons

Since the real estate is used as a security against default, these loans feature lower LTV rations unlike the regular loans. This ration is between 50 and 70% unlike the ration of regular loans, which is 80%. However, if you are an experienced flipper, it can be even higher.

Aside from this, the interest rates of these loans are higher as well. For subprime loans, the rate of interest can be even higher. In 2019, for instance, the rates of hard money loans were between 7.5 and 15% based on the period the loan is granted for. By contrast, the prime interest rate was only 5.25% in the same period.

Another disadvantage is that these lenders may not offer loans against owner-occupied property because of compliance rules and regulatory oversight.

Hope, now you understand what hard money loans are and the pros and cons associated with them. For more information, you can consult your mortgage broker.

Honoring the Memory of Your Lost Pet

Anyone who is a true animal lover will tell you that the loss of a pet can sting every bit as much as losing a human friend or family member.Unfortunately the sad truth is that most pets don’t have the same type of life span as a person. This means that losing a pet is often inevitable. For those who feel the loss of a pet, pet memorials can offer a sense of closure. It’s important to remember that a beloved pet is just as much a part of the family as any human being is. Honoring pets with pet memorials gives grieving family members the opportunity to come together and say goodbye.We have memorial services when we lose friends and family members, to have one for a pet is a normal part of the grieving process.Just because a pet was an animal does not reduce the significance that they had in your life. You can form a loving bond with a pet that can be very painful when it comes to an end.As pets get older there may come a time when an especially difficult decision must be made. When a beloved pet is suffering due to age and injury it is in the best interest of the animal to consider euthanasia. Although the thought of losing a pet may seem like it is too much to take, keeping a pet around that is suffering isn’t fair to the animal.When the time comes, euthanasia is a way for you to allow your pet to rest in peace and escape the suffering that age can bring. You can choose to take your pet to a local vet, or many vet offices will even come to your home to perform this merciful and compassionate service for you. Although the pain may be overwhelming at first, you can take comfort in knowing that you have done what is right for your pet. Your pet is no longer suffering, and can finally rest in peace.Once your pet has passed away it’s possible to still feel close to them when you choose pet cremation. Cremating your pet allows you to keep their remains in a manner which is legal and safe. Burying your pet has health issues and there are often laws in place that prevent you from doing so. Instead of burial you can choose to cremate your pet and keep their remains, and memory close to you. There are many types of urns for pet ashes that can be purchased allowing you to keep the ashes of your pet nearby. Memorial pet urns are a way to remember your pet and give them an honored place in your home.You can place a pet cremation urn on your mantle, or in another place of significance, allowing you and your family to remember how much your pet meant to you.Loss is a part of life. All of us lose loved ones and friends over time, and the loss of a pet can be just as painful. Why not honor your pet by choosing pet cremation? Your pet was a part of your life, for many people a pet could have been a companion for many years. You owe it to your pet to make certain that the end their lives with dignity and respect.When the time comes, and your pet is no longer healthy enough to function normally, you may have a difficult choice to make. You may have to choose euthanasia. Know that while this choice may be painful, it is the right choice to make. Even after yourpet has passed away you and your family can still feel close to him by placing his remains in one of the many pet memorial urns that are available. With your pet’s ashes nearby you and your family will be reminded not of the pain of losing him, but of the joy that he brought to your lives.Your pet probably spent most of his life in loyal service to you and your family. He probably wanted nothing more than to please and protect his human masters. By having a memorial service for him, and choosing pet cremation, you can honor him in the way that he deserves.

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Cure Your Financial Lack: Basic Factors to Consider for Becoming Financially Free

Most people can do better financially. Most of us if not all of us meet opportunities on a daily basis that are intended to change our financial fortunes for the better but are unable to recognize them in their camouflaged state. Opportunities of devious magnitudes happen to all men. We are programmed to see and hear only those things that we want to see and hear. What will happen if we can learn to freeze this approach to life and unfreeze the conscious expectation of everything we need to become what we should be, that is, if we fully comprehend and have visualized what we should be? Nothing happens by chance! You have to want it and want it very bad.There is always a starting point to everything and a first time with which to experience things. If we do not start we’ll never get anywhere and the worst that can happen is retrogression. Our dreams which are linked to our desires differ in magnitude. Some people desire to be wealthy and others desire to be well to do, that is, to have their needs met. Some actions have to be initiated for these things to manifest. It is only when you are consciously conscious of who you want to become and what you want to achieve that you will begin to take appropriate and relevant actions to achieving your goals. We all have something to give to others which we can do in exchange for something. This is how battering came about and was highly effective. It was all about meeting the needs of others. Think about what you can do to meet the needs of others and receive compensation for doing that and you will have found an income generating system.For those who are already earning an income, there are some things you can begin to consider to improve your financial status. Make sure that you cover the basic stuff first before considering moving to the next level of financial freedom. Personal financial management is the first hurdle to cross before attempting total financial freedom. If you acquire basic skills for personal financial literacy and manage your personal finances well, you’ll then find business finance management very interesting. The skills of saving, investing, and making your money grow for your future financial needs and of protecting your income are the basis for proper financial planning. Everyone can cure their financial lack.The quest to be financially healthy requires that we be disciplined, responsible, knowledgeable and understanding. Financial literacy is the most important set of life skills that we all need to survive and be successful in the modern world. This is the set of skills that has been acquired by very few people hence there are only few financially successful people in the world today. The lack of this skill results in many people finding it extremely difficult to manage their financial affairs and to successfully plan their financial future.If we spend all our money today we’ll have no provision for tomorrow and we’ll have to work extra hard just to survive. If we save some of our money today, we’ll have something for tomorrow. This is how serious saving and investing a portion of our monies today is. Put your money to good use and let it generate more money for you. If you spend all your money today, then you are giving away your future financial freedom. We cannot just hide our heads in the sand and hope that the future will take care of itself. We have to force ourselves to make hay while the sun is still shining, when age, time, health and resources still allow us to do so. Choosing not to take heed of the advice of the wise will be downright ignorant and foolish.Personal financial management is the launching pad for personal financial freedom and paves a way to personal wealth. We have to start by acknowledging that we are not going to be young forever, that we are not going to be strong physically and mentally forever. We are not going to be able to work forever even though we may wish so. Working, as a business owner or employee, requires strength and energy and aging might be a limiting factor. You need to prepare for an event or time when you will be unable to work any longer. This calls for you to protect your personal income in case you die, become disabled or retire due to old age. You have to consider life and disability assurance while you are still working either as a business owner or employee to protect yourself and your income. Not considering this advice is purely being irresponsible. Consult your financial adviser and engage him or her on this issue. Do the right thing, plan your personal finances. There should be enough money available to pay off debts and in the case of disability, to make changes that will help you cope with your new situation.You have to understand the negative effects of inflation on your savings so that you can craft strategies to counter it. For example, an inflation rate of say 5% a year will half the buying power or value of your money in 10 to 15 years’ time. In other words, if it costs you US$125 a month now to buy your groceries, you will need US$250 to buy those same groceries in 10 to 15 years’ time. Time is the most important factor when it comes to saving and making money grow. The longer time you save, the more interest you will receive out of your savings.Money grows when it is used to make more money. However, investing money is not a sure bet, it involves huge risks. The objective of investing is to make more money. Your goal should be to maximize the returns on your investments with less risk on your capital. It starts from searching and researching companies, funds and business sectors you wish to invest in. There are many different ways of investing money in the economy and each of these different ways has its own levels of risk and return unless you open an investment account with a financial institution (bank). Work on your action plans for short-term, medium term and long-term investment strategies.While it is extremely important to invest in reputable companies, the reputation and integrity of your financial adviser is extremely important. Do not take your adviser’s advice at face value. Go for a second and even a third opinion and do more research. You cannot afford to believe only what your adviser is telling you. Trust is not enough as it will not guarantee you your returns. Research and scrutinize documents before committing yourself. Never put all your eggs in one basket regardless of how tempting it might be.It is extremely important to have a will. Will allows you to register your wishes in writing so that when you pass on, you may have this document speaking for you. Failure to do this will result in your possessions going to people you never wished to have them or going to the state (intestate). Any person of 16 years or older who is mentally capable of understanding what he or she is doing can make a will. Estate laws differ from country to country. Please check laws relevant to your country. Banks, lawyers and trust companies (most of them are insurance companies) can assist with the drawing up of a customer’s will. Ask your banker or financial adviser about the process of setting up a will.Regardless of how prosperous your business and investments are today, you have to provide in advance for the needs of your growing age and the protection of your loved ones. A budget is a plan that deals with the future allocation and utilization of various resources with regard to different organizational activities over a given period. Budgeting is a disciplined way of spending your hard earned income. It is a tool used to translate future plans into quantitative terms.Remember that the wealth you are trying to create is not only for you, it is for your second, third and fourth generations. Budget your expenses in such a way that you may have money available to pay for your necessities. You must also make provision to pay for your entertainment without spending more than ninety per cent of your earnings. Make provision for giving to deserving charities in the ninety per cent available for you to spend. It is important to get used to giving as it is a spiritual and universal law that binds all of us. Make sure that you invest the ten per cent of your income to give you excellent returns. Guard this ten per cent with all diligence for it is a seed that has to generate wealth for you.

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