Kennedy Funding Lender - Articles

Hard Money Loans – Lenders and Brokers

2006-11-01T07:52:00.000-08:00

A hard money loan funds a potentially viable project for which financing may be unavailable from conventional sources. As you might imagine, the risks involved are greater, and so are the interest rates.

Hard money loans can be used for a wide variety of purposes -- bridge financing, debt consolidation, acquiring property, commercial deals and many other purposes. Lending decisions and loan disbursement are normally quick, and collateral is required.

Normally, the practice is to advance around 65% of the value of the security offered. The standard practice of Kennedy Funding, the nation’s largest direct private lender of hard money and bridge loans, is somewhat different. Kennedy Funding will normally fund up to 75% LTV. In some cases, Kennedy will grant higher amounts. And typically, applications for amounts in a certain range, usually $1 million to $100 million, are considered. In some special cases, Kennedy Funding will fund loan amounts above $100 million.

Some lenders won’t advance money on the collateral of properties on which the borrower or his close relatives are living. Lenders often consider bad credit and high-risk applicants who may find it difficult to borrow elsewhere.

In the hard money field, the major players are lenders and brokers. As a borrower, you can approach either group. A broker’s job is to put the potential client in touch with interested lenders, and offer advice on the best deals. Quotes from three or four possible lenders are typically presented to the borrower.

Of course, there is likely to be a fee for the services. If the lender is approached directly, there would be some savings, but most borrowers may not know whom to approach, or how to deal effectively if they do.

You may or may not have to offer a payment up front, as some lenders will process a loan application without an advance. The annual interest amount is divided by twelve to arrive at the monthly installment.

When all is said and done, hard money funding caters to a real need. Kennedy Funding ranks at the top of the hard money funding assemblage.

Understanding Hard Money Loans

2006-10-30T07:54:00.000-08:00

Hard money loans are often described in complex real estate terminology which makes it difficult to understand. This is unfortunate, because the hard money loan is actually a very simple concept. In actuality, it’s the provision of an actual cash loan made to a borrower by a private lender. In a typical Kennedy Funding scenario, hard money loans are not subject to the stringent guidelines of a federal or conglomerate lending institution, and are therefore negotiable with Kennedy Funding directly, which offers avenues of negotiation not available elsewhere.

Who applies for hard money loans

The hard money loan, in theory, is a private loan that doesn’t require the same stringent guidelines as other loan types. Because of this simple reason, the hard money loan is frequently sought by people who:

* Have a history of bad credit
* Have no credit
* Have previously had a property foreclosure
* Have unverifiable income
* Must refinance immediately
* Need hard money quickly

The bottom line

Another way of thinking about the hard money loan is to view it as the pawn shop equivalent for real estate. There is no hiding the fact that the hard money loan is available with few questions asked and is paid in cash. In simple terms the cash can be used, as intended, for the financing of the project, or it can be used by the borrower in some other fashion. In any event, one can safely assume that the hard money loan will still need to be repaid and the property is still at stake.

Hard money has a definite place in today’s arena, however. Kennedy Funding, the leader in the direct private lending industry, fills a real need. Kennedy Funding does this by closing loans quicker than anyone else, and being more flexible than traditional lenders. Kennedy, in fact, has become known as a lender capable of funding those ‘impossible’ loans that no one else wants to touch.

Hard Money Mortgages for Purchasing or Refinancing

2006-10-13T09:54:00.000-07:00

Today’s hard money comes in lots of flavors, one of the most common being mortgages. Using the owner’s equity in real estate, hard money lenders normally lend up to 75% of the value of the property. Typically, hard money mortgages are used for commercial purposes, but they cal also be used for residential properties. In this case, the loans are usually referred to by their more genteel appellation: non-conforming mortgages.

The lending criteria for hard money mortgages are pretty straightforward. Loans are based on the value of the ‘subject property’, real estate owned or about to be purchased by the borrower. If the borrower is buying property, the ‘value’ of the real estate is defined as the actual purchase price of the property. If the borrower needs hard money for a refinance, the ‘value’ is determined by a written real estate appraisal.

When looking for a hard money refinance loan, the lender will want to know certain things: when you purchased the property, what you paid for it, etc. If you bought a property a month ago for a specific sum, the lender will be hesitant to lend you more than the purchase price. When you’ve owned the property for about a year, and if you’ve put some money, sweat equity, or both into the property, then you can get a re-appraisal, and possibly get a loan based on the new, ‘improved’ value of the property. This is known as ‘seasoning.’ Make sure you’ve seasoned your property before looking for a refinance mortgage at a substantially higher value figure than what you paid for it.

Enhance Your Real Estate Equity And Investment Portfolio

2006-10-12T09:47:00.000-07:00

Investing in real estate is one of the most common ways hard money funds are utilized. It makes sense, considering that real estate investing is a cash intensive activity. Oftentimes, investors need more operating capital than conventional lending institutions are willing to supply, especially on short notice.

Hard money can indeed be a deal saver when conventional financing takes longer than expected, or isn’t available for some reason. It’s a fact that your FICO score can take a nosedive if you invest in a lot of property, simply because of the number of mortgages you’ve taken on. On the other hand, property that is available for a reasonable price may not meet conventional banking standards. Whatever the case may be, hard money lenders are not constrained like banks or other mainstream institutions are.

Hard money lenders have to be nimble, flexible, and creative. Conventional lenders can take up to six months to fund mortgages for real estate investing, whereas hard money lenders can fund in two weeks or less from the time you begin.

Hard money lenders also have an advantage, in that they can fund projects that banks cannot. If you’re interested in investing in a golf course, airport, or amusement park, conventional banks probably won’t help you. Hard money lenders can, and will.

Hard money is best used as a bridge loan. Terms usually range from one to three years, providing ample time to prepare the property or your personal financial status to get long-term conventional financing, or to sell the property outright.

Hard Money: Should You Work With A Broker Or A Direct Lender?

2006-10-11T05:14:00.000-07:00

You’ve decided you need a hard money loan. Should you approach a direct lender or use the help of a broker? Here are some points to consider about both options.

The Direct Lender Approach
It’s obvious what the advantages are in working directly with a direct private lender. You save money by eliminating the middleman. Brokers are paid from a percentage of the points you pay on a hard money loan. Ergo, the more brokers involved, the more you will pay in points and percentage to cover the cost.

If your hard money lender is a good match for you, you can speak directly to the right people and avoid any noisome runarounds. And be aware that, more often than we would wish, a broker’s choice of your direct lender will be based on the commission he plans to get, rather than on your best interests. By working directly, you can close more quickly, because no one can explain your situation better than you can, and obviously no one is as committed to your business and your loan as yourself.

The Broker Approach
There are also definite advantages to working with a broker. An honest, experienced broker has knowledge of and access to the top direct hard money lenders in the country, and knows where you loan will fit the best.
He can help you ‘package’ your loan in the best possible way, sharing information with you that can help decide how much to expect based on the equity in your property, how fast you need to close, and more. A top-notch broker can also help you with the complex application process and float it to what he feels are the best direct lenders for your situation.

Ultimately, you’ll have to decide: broker or direct access to a private lender. There are advantages to both.

Using Hard Money to Stop Foreclosures

2006-10-10T09:49:00.000-07:00

You can use hard money loans in order to stop a foreclosure. These loans are the specialty that hard money and direct private lenders excel in. Should you face foreclosure on a property, whether it be one that you own or one that you wish to purchase before it hits or is already in foreclosure, hard money lenders can be a viable resource for sufficient cash in a short amount of time.

Direct private lenders can fund a real estate purchase or refinance a loan in two weeks or less from the time all your documentation is in their hands. Make sure all your documentation is ready for your broker or lender before proceeding, and use the following list as a guide.

Make sure you have:

Written real estate appraisal with photos

Purchase contract if you are purchasing the property
Personal financial statement
Income statement for the borrower
2 yrs P&L for the property if it is income producing
2 yrs Tax returns for the borrower
Statement of use of funds
Proof of where the balance of funding will come from (such as a bank statement showing the funds available) if you are buying the property

Remember: If you’re completely prepared, with a complete package, your funding will proceed even more quickly.

Fast Money The Easy Way

2006-10-09T09:56:00.000-07:00

When a sudden, urgent need for money pops up, you may be tempted to sell your ideal property to deal with it. It’s a good decision to get money from your own sources instead of getting bound with debts and repayments for years. But the sale process is a long one, and your needs may not wait that long, in which case a short-term bridge loan may just be the way to go. Bridge loans act as the financial bridge between the requirements of the borrower and the sale proceeds of his property.

With a short-term bridge loan, you can go for amounts ranging anywhere from $1 million up to $100 million or more, depending on the requirements and policies of the lender. These short-term loans carry a higher rate of interest, however. But, lest you trouble yourself about how you can swing such a rate, don’t worry yourself unduly. These loans give you an option to pay only the interest until you get the sale money, out of which you can pay the principle amount for the loan. The repayment period for such loans can go up to three years or more, but it’s always better to repay the loan as early as possible.

There are a lot of bridge loan lenders offering you money at different rates and terms. You need to find that one lender which can serve you best, one that will work with you on a personal, ‘custom-made’ level. One place to go for that one ‘perfect’ lender is the Internet, where large numbers of quotes are available for you to compare easily, using online comparison tools, debt and repayment calculators. But be alert for frauds and ‘sharks’, and always opt for the established, trusted, genuine lenders.

Short-term bridge loans accept the following properties as collateral for the loan:

•Residential Properties
•Commercial & Semi-Commercial Properties
•Auction Properties
•Development Sites
•Buy to Let Properties
•Retail Shops
•Land with planning permission

Bridge loans are popular among borrowers because of their faster approval for larger amounts. It can take less than five days to get your money, and these loans can be used for virtually any purpose, including buying commercial or residential properties, overseas property, traveling, debt consolidation, or any other large, personal usage. All these features make short-term bridge loans suitable for a large percentage of borrowers.

Hard Money Loans – How Long?

2006-10-05T10:04:00.000-07:00

Now that you’ve decided upon a hard money loan, how long will the term be?

A frequent question, especially in the hard money arena. As with any loan, length of the loan is highly influential, affecting payment size, interest rates, and how long you will be tied down by the loan. Therefore, consider the following facts about hard money loan terms and lengths.

As a general rule, hard money loans are short to intermediate in length. Since they’re used for everything from cars to airports, however, the term length obviously varies, depending on the lender and the loan. As a rule of thumb, most hard money loans will wind up somewhere between one and six years, with the usual length around three years. Normally, the payments include some interest and principal, but eventually there will probably be some sort of balloon payment owed. And that’s where borrowers can run into trouble.

But some private lenders offer longer hard money loans. In fact, in some cases a hard money loan can be like a mortgage. The larger private money lenders can often make such loans, including those in the league of Kennedy Funding, doing business for over 20 years, and specializing in fast commercial bridge loans between $1 million and $100 million or more, and deliverable in days, as opposed to weeks or months from conservative, traditional bank-oriented institutions. Always choose your private lender wisely, and you will be worlds better off.

Bridge Loans – Duration

2006-10-03T10:06:00.000-07:00

Bridge loans are short-term financing option for purchasing new property. They’re quick to obtain, and quick to expire. Permanent financing can vary from fifteen year loans all the way to forty-five year loans, and are usually obtained for thirty year terms. Bridge loans are usually for anywhere between two weeks and about three years. They’re not permanent financing option, which is why the duration is so short. Bridge loans provide a window of time agreed upon by the borrower and the lender to obtain acceptable, permanent financing. A bridge loan’s biggest attraction is speed.

If you’re unsure of how long it will take to sell your current property, lenders have a solution for that. The length of the bridge loan typically lasts for either the term stated, or when the sale of the property is official and permanent financing is obtained, whichever comes first. Lenders commonly use an appraisal and information provided by a realtor or other agent to help them determine if the term of the bridge loan is appropriate for the particular situation. Since a bridge loan expires in such a short amount of time, it is fairly possible that you could end up with the bridge loan due, and no permanent financing to cover the cost. So research the term lengths and speak with experienced lenders, and you won’t get caught without financing.

Bridge loans are specifically designed for quick purchases. They provide room for negotiation when purchasing a new property and allow time to obtain permanent financing. If you know when your sale will close, or if you know when you will obtain permanent financing, then the duration of a bridge loan is a given. But if your current property has been on the market for a while, or you’re still looking for a lender for a thirty year term, the duration of the bridge loan will be figured out by the lender.

Bridge Loans – Commercial and Investment Properties

2006-10-01T10:07:00.000-07:00

Bridge loans are often used by builders, developers, contractors, and even investors to fund their projects. They provide an immediate source of funds for a property transfer that has a quick deadline. Bridge loans are often an essential aspect of financing for closing the deal so that no money or time is lost.

Bridge loans also provide time that may be necessary to address any problems that may arise while trying to find permanent financing. Since there are so many aspects involved in commercial and investment properties (getting the permits, doing needed planning, or finishing any evaluations or approvals), a bridge loan can help cover carrying costs and begin the projects without having it impact overall funds or cost additional time.

Builders, developers, and contractors also use bridge loans as a quick source of funding as well when refinancing a loan that about to mature. The bridge loan lets them pay off the old loan at the maturity date, and gives them the opportunity to look for a lender to refinance the property. Bridge loans can be ideal solutions for businesses when it comes to speed.

A company with considerable experience in providing bridge loans is Kennedy Funding. The company recognizes the importance of speed, and that loans must often be structured around each client's unique set of financial circumstances. They have been providing lightning-fast service and creative funding solutions throughout North America since 1986, and internationally since 1996. Among the hundreds of successful deals Kennedy Funding has closed are land developments and construction projects, casinos, commercial and industrial projects, retail centers, residential communities, golf courses, beachfront resorts and ski areas

Hard Money Loans – What Do They Cost?

2006-10-01T10:04:00.000-07:00

Okay, so let’s suppose you’ve decided upon a hard money loan.

You’ve even located a source you trust, you know what the money’s for, and you have everything lined up.

Fine. But have you considered what all this will cost? Remember, a hard money loan is going to be more expensive than a traditional bank loan. But exactly how much more expensive? Consider the following.

First, know that the interest rate on a hard money loan will be higher than on a traditional loan. You’re paying for getting your money faster. Another cost is the possible up-front fees. Some lenders don’t use them, while others do. Just be aware that they could be a factor in your loan.

You must decide which is more important to you: the quickness of the loan or the interest rate you’ll be paying. In many borrowers’ minds, they want to have their money in hand as fast as possible, so they can make it begin working for them. In such instances, said borrowers go to the nation’s leading private hard money lenders. They can secure your loan commitment in as few as 24 hours, and you can get your money, up to $100 million or more, in typically 10 business days. This is one of Kennedy Funding’s major selling plaudits. In certain instances, however, you can even get it as quickly as two to three days. This is paramount to many hard money borrowers, who are more than willing to pay a slightly higher interest in order to secure their money sooner.

When To Take Out A Hard Money Loan

2006-09-15T10:01:00.000-07:00

It’s vitally important to know when to take out a hard money loan, and who should be the one(s) to do it. Hard money loans are tempting, but they’re not for everyone. There are certain definite circumstances where a hard money loan is appropriate. You owe it to yourself to become familiar with these circumstances so you can avoid making a questionable financial move and placing you and your property at risk.

First off, for those in a comparative hurry, hard money loans are ideal. If you need to have money available fast for making real estate purchases, hard money loans are great, without a doubt. When dealing with the nation’s leading hard money lenders, which comprise Kennedy Funding and competing institutions, you can get your loan commitment in as little as 24 hours, and your money in as few as five days or less. And the amounts are impressive – from $1 million up to $100 million and more. So when you’re after speed, the Kennedy Fundings of the industry may be exactly what you need.

Hard money loans come from private lenders who may be willing to take a chance on a property you are improving. Kennedy funding, in addition to the larger private lenders, are actually quite willing to make such loans, on land that needs improvement, or land with no development whatsoever, or ‘raw land.’ These institutions are willing to accept the land itself as collateral, and can sometimes be the ideal solution.

Quite simply, knowing when a hard money loan is appropriate is crucial. There are times when it’s tempting to get the money fast when you don’t necessarily need it. Understanding need and appropriate hard money lending situations is an important way to ensure that you make a sound decision concerning your hard money loan.

Hard Money Loans – The Drawbacks

2006-09-13T10:00:00.000-07:00

While it’s true that hard money loans can get you money in a hurry and in tough situations, there are admittedly some drawbacks to be aware of. Considering the cons of a hard money loan may help you avoid a costly mistake. Once you become educated, you can avoid the problems associated with ill conceived hard money loans. Following are a few points and realities that may shed some light on the ‘other side’ of hard money loans.

To start with, hard money loans are expensive. Compared to a traditional business loan, expect to pay more in interest rate in exchange for getting your money faster. Simply consider the higher interest rate as the cost you pay for the convenience of speed.

You should also know that extensions can sometimes be harder to get on hard money loans. If you get to the end of your interest term and need an extension, it may be harder to get. In that case, the entire balance of your loan could be due immediately. So it’s safe to say that there are always risks when considering a hard money loan.

Hard Money Loans – How Much Can You Get?

2006-08-17T10:03:00.000-07:00

A good question. And a tricky one. Because there are so many variables involved. Hard money loan minimums and maximums vary because of the nature of the loans. Since the money is coming from a private lender, it is largely up to the particular lender to decide what their minimums and maximums are. And they may change from situation to situation.

You should know, however, that there are usually minimums on hard money loans. So how do lenders decide what the minimum is going to be in your case? There are several factors they consider.

First, they look at the interest rate. For a higher rate, a smaller loan may be possible because of the money making versus risk ratio. Also, the investment itself may influence the minimum on the loan. If your reason for needing the money is a good one, then you may be able to get a smaller loan. If not, you may be stuck with finding another lender. Finally, a minimum may simply be determined by what the lender considers his time is worth. If you need a smaller loan, you can probably get it, but get accustomed to the fact that your search will take time.

As for a maximum, that also depends on several factors. One factor may be your relationship with the lender. The more you earn their trust, the more likely you are to get more money. Secondly, and most obviously, the resources of your lender are a factor. After all, they can’t lend what they don’t have. That’s why many borrowers go to the nation’s leading private money lenders, the Kennedy Fundings et al, who are able to close loans quickly, in a matter of days, and make loan amounts up to $100 million or more. Indeed, if your land collateral is great enough, and you establish a decent relationship with a Kennedy Funding or comparative company, you may even get significantly more.

Hard Money Loans – The Advantages

2006-08-13T09:59:00.000-07:00

It’s true that hard money loans often come with much higher interest rates than traditional loans. So why on earth would anyone want one? You’re probably thinking that if you can get a bank loan in the traditional way for a lower rate, then there must be other advantages that accompany a hard money loan which make getting one appealing. And you’d be right. Read on for some reasons why a hard money loan may be just what the doctor ordered.

The most common reason to go after a hard money loan is to get the money faster. With a bank loan, you are usually looking at a 45-day minimum to get your money, and longer in most cases – up to six months isn’t uncommon. Private money, which is used in hard money loans, can usually be in the hands of the individual that applies for it in as little as 24 hours, which means you can start making use of it almost immediately. In the case of the leading private hard money lenders, Kennedy Funding prominent among them, you can have your money in as little as five days, with a commitment in two days or less. Lenders on the level of Kennedy Funding pride themselves on speed, and upon an ability to structure loans according to the borrower’s special circumstances. In other words, top hard money organizations are much more nimble and versatile than conventional lending institutions.

Another reason someone may investigate hard money loans concerns the current state of their property. If a property needs fixing up or does not produce cash flow, you usually can’t get a bank loan. But if you’re after a hard money loan, a private lender, say a Kennedy Funding, may be able to get you the money you need to fix up the property or get it to a state of making money. It’s good for both you and the lender, although at a higher interest rate price tag. The bottom line is, you’ll need to decide if the hard money loan is what you really need and if it will truly benefit you in the long run.

Lastly, if you’re looking to buy commercial property with no tenants, you’ll find that banks will typically not want anything to do with it. A hard money loan can help act as a financing bridge. The hard money can buy you time to get tenants and have them on-site for a year or more. At the end of that time, you can refinance at a lower rate with a bank and pay off the hard money loan in the process. Of course, you’ll still need to make the final determination whether or not a hard money loan is right for you. Many borrowers decide that the speed, which Kennedy Funding and other leading lenders provide, more than makes up for the increased interest rates that they’re required to pay.

Hard Money Loans – An Overview

2006-07-13T09:58:00.000-07:00

There’s a lot of talk about hard money loans these days. The pros, the cons, the what’s, why’s, and wherefore’s. Here’s what you need to know about hard money loans in a nutshell.

A hard money loan is simply a type of financing, as you might expect. However, it’s a bit different than the loans you may normally think of when the topic of financing comes up. Essentially, the borrower in a hard money loan gets their money based on the value of a piece of commercial real estate.

In the great majority of cases, a hard money loan costs a higher interest rate than do the more typical, traditional commercial loans. This makes them expensive for those taking them on and due consideration should be given to this fact before someone applies for a hard money loan. Another thing you must know is that hard money loans usually come from any place except a commercial bank. Most deposit institutions want nothing to do with hard money loans. Then where do they come from? They come from individuals or other types of companies, in most cases, rather than from traditional financial institutions. They come from private lenders, among them Kennedy Funding, America's leading hard money lender -- specializing in bridge loans for commercial property and raw land development, workouts, bankruptcy and foreclosures.

Hard money loans began appearing in the 1950’s, when the credit industry was first undergoing significant changes. They were a convenient solution for property owners who wanted capital and had no other way to acquire it. Eventually the hard money industry crashed slightly during the real estate collapses of the 1980’s and 1990’s, only to recover again in recent years. Today, higher interest rates go hand in hand with hard money loans as a way to protect the loans and lenders from the considerable risk that they undertake. When dealing with leading hard money lenders, including Kennedy Funding, however, most borrowers are more than willing to pay a slightly higher interest rate in order to escape the endless miles of red tape that traditional institutions insist upon. In addition, leading private lenders such as the Kennedy Fundings of the industry are able to slash the time it takes to close a loan, from the weeks or months a traditional lender would need, to a matter of mere days. In the eyes of borrowers and brokers alike, this, along with other value-added services, more than makes up for the increase in interest.

Bridge Loans – An Overview

2006-07-05T10:06:00.000-07:00

When you’re in the market for a piece of property, whether it’s residential, commercial, or an investment, you’re probably looking at several different types of financing options. If you already have enough funds available, and you have no existing properties that you have to worry about liquidating to get the funds, the financing will go fairly smoothly. But if you’re planning on selling an existing property to get the equity before or after purchasing a new one, things can get complicated if you are not prepared.

A popular financing option is a bridge loan. A bridge loan, commonly referred to as a swing loan, is a relatively short-term financing option for new purchases. A bridge loan helps finance a new purchase by providing money to help "bridge" the time gap before a previous property sells, and permanent financing can be obtained for the new purchase. Bridge loans are normally paid off when the existing property sells.

Bridge loans are used for a variety of real estate transactions, from residential properties to commercial properties. They’re typically used to acquire new properties, cash out on current equity, buy-out, purchase a foreclosure, or for new construction. Usually, to obtain a bridge loan on any new purchase, you need a contract to sell on your existing property. If not, then a bridge loan may not be the most appropriate financing option for you.

The attractive thing about ridge loans is that they let you purchase property almost immediately, without having to wait for another property to sell. They give you the needed time for your current property to sell, while still allowing you to purchase the new property quickly. If your property is taking longer to sell than originally planned, a bridge loan can help close the gap and let you make a new purchase without having to lose the chance.

There are private hard money lenders who specialize in bridge loans. Kennedy Funding is one such company, specializing in bridge loans for commercial property and raw land development, workouts, bankruptcy and foreclosures. Their creative financing expertise enables them to close on these equity-based commercial bridge loans of $1 million to over $100 million in as little as 5 days. Their international network of private lenders allows borrowers with assets to get the hard money commercial loans they need super-fast. So, no matter where in the world someone does business, they make getting a bridge loan simple and quick.

Hard Money Loans – Where To Get One

2006-06-17T10:01:00.000-07:00

So you’ve finally decided to apply for a hard money loan. Fine. But that’s only half the battle.

Because the money comes from private lenders, it can be difficult if not impossible to know where to look for the best hard money loan. Here are some of the more common ways to track down a hard money lender for your next real estate or business venture.

You can start with local attorneys. Locate settlement and closing lawyers who have worked to prepare hard money lender loan documents. They can usually tell you who is loaning hard money and looking for places to invest it. They can be a veritable wealth of information, so start there.

Next, talk with area accountants. They usually have clients with a lot of free capital that can be lent out to you in the way of a hard money loan. Even if they don’t know a traditional hard money lender, they may be able to help you get connected with someone who is interested in getting into hard money lending. Accountants are a very good source of hard money lenders you can put your faith in.

Last but certainly not least, simply go online and let the Internet work for you. That’s where you can find the nation’s largest, most successful private hard money lenders. In business since 1986, one such lender is Kennedy Funding, America's leading hard money expert, specializing in bridge loans for commercial property and raw land development, workouts, bankruptcy and foreclosures. Kennedy Funding employs creative financing expertise that enables them to close on these equity-based commercial bridge loans of $1 million to over $100 million in as little as 5 days. Their international network of private lenders, to use one illustration, allows borrowers with assets to get the hard money commercial loans they need super-fast. So, no matter where in the world someone does business, these lenders makes getting a hard money loan fast and easy.

What Exactly Is a Hard-Money Loan, Anyway?

2006-06-13T09:57:00.000-07:00

It’s simple, actually. Hard-money loans are mortgage loans that are offered by private individuals or companies rather than financial institutions, such as banks or credit unions. These entities are known as "hard-money lenders." Borrowers who either do not qualify for mortgages through financial institutions, or who do not want to put up with possibly lengthy waits for loans to close, often go to hard-money lenders. These borrowers can sometimes have bad credit, insufficient income, or other factors that are considered undesirable to financial institutions. Property conditions may play a role as well, in why financial institutions categorize these borrowers as high risk. But other times, borrowers simply don’t wish to become embroiled in the seemingly never-ending red tape that traditional lending institutions require. A hard-money loan may also be an attractive choice for borrowers who are behind on their mortgage payments, or in danger of foreclosure.

With a hard-money loan, a private individual (or individuals) acts as the lender and extends a loan to the borrower. The hard-money lender can be a person, a trust, a real estate investment group, or any other private group. Certain companies, the likes of which include Kennedy Funding, are composed of partners, legal practitioners, and other support staff that specialize in fast, hard money bridge loans, and can offer borrowers surprisingly speedy loans from between $1 million and $100 or more.

Because the private lender is taking on this risk, the lender may charge higher interest rates than traditional mortgages obtained through financial institutions. The interest can be higher than loans available through banks and other, more traditional mortgage lenders. This is simply because these borrowers are considered much higher-risk candidates. But buying a hard-money home loan can be a great option for someone whose other financing options are not as stellar as some. And even while paying higher interest rates, many borrowers feel that the extra speed in closing, the virtually non-existent red tape, and other value-added services offered by companies on the level of Kennedy Funding far outweigh the extra interest.

Despite higher interest rates, there are definite advantages to a hard-money loan. The borrower can negotiate the interest rate and other terms and conditions more easily with the private hard-money lender than with a financial institution. The borrower also saves money on title insurance premiums and attorney's fees -- charges often applied by financial institutions. Because borrowers don't have to wait for mortgage approvals from financial institutions, the closing period is also considerably shorter. In point of fact, Kennedy Funding and other leading private lenders have successfully closed deals in less than one week, and their normal time frame is a fast 10 business days – far quicker than traditional lending institutions that can take weeks or months to close on the identical loan.

In short, Kennedy Funding and comparable private hard money lenders offer a viable solution to borrowers, and brokers, seeking a more attractive venue than a bank or other conservative organization.