Hard Money, Fast Turnaround
Category : Blogs
Why are hard money loans generally so short?
At Fulford Lending our loan terms generally average at about three years to completion. On the other hand, most hard money lenders generally lend money for terms of six to twelve months on average. This can put borrowers in a bind and exclude some from working with you all together. If the borrower can make payments and the loan to value ratio is good, it makes good business sense to offer them a refinancing option.
The reason for such restrictive terms in most cases, is due to the fact that hard money lenders rarely lend their own money. They lend from a pool of liquidity consisting of investors and colleges. These investors don’t want their money tied up for long, so they demand short cycles for the loan to be paid in full. This also makes sense for the lender, because they are able to charge points at the creation of each new loan. The short stick goes to the customer. Conversely, more favorable term limits are found in lenders who use their own money. They are free to adjust as they see fit. After all, that is one of the reasons we are able to remain flexible.
My feelings on the subject,
Nathaniel S. Fulford.