What is a hard money mortgage?
A mortgage is an instrument used by hard money lenders to provide hard money loans under which property on which the loan is being raised will be used as security of the hard money loan. Mortgage in itself is not a liability. It’s the lender’s security for a debt. Mortgage is a transfer of an interest in property from the owner to the hard money mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.
The deed to secure debt is a mortgage instrument used in the state of Georgia.
Types of Hard Money Mortgages:
Commercial Hard Money Mortgages
Commercial hard money lenders charge hefty interests on commercial lending. In commercial mortgages the loan to value ratio (LPV) is in between 50%- 70%. LPV depends on the real estate value and the type of business that functions out of the property. Mortgage created under commercial mortgages are a lien on the title to the mortgaged property. The interest rates will be any where between 15%-21%. Foreclosure of such loans will require a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.
Residential Hard Money Mortgages:
Residential hard money lenders charge 3 to 6 percentage points more than the conventional source of loaning agencies. In residential mortgages the loan to value ratio is in between 65%- 75%. LPV depends on the real estate value of the property. Mortgage created under residential mortgages are a lien on the title to the mortgaged property. The interest rates will be any where between 12%-18%. Foreclosure of such loans will require a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.
