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. Moreover, it has been said as well that hard money loans Atlanta consist of a first mortgage on a residence and this process lead to the creation of 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. For those of you out there who may be wondering about the possible reason as to why lenders do not mind the credit history of the borrower, well, that is because they look to the property for security, plus they are being paid dearly as well for the chance they take by basing the payment on the value of the property alone.
There are other things that you must know when it comes to hard money loan 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. More often than not, the loan is not paid in the usual principle plus interest but more likely, they are being paid in interest only with a balloon at the end of the stated loan period. With regards to this matter at hand, the borrower will be paying interest on interest and due to the fact that points are interest and mortgages are calculated with the inclusion of points, each payment that the borrowers make is paying interest only, therefore the interest on interest.
You can actually say that it is common for hard money lenders in Atlanta GA out there to be careful and cautious when lending hard money thus, they resort to ensuring a careful appraisal is done on the 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. They have to protect their interest as well.