Hard money mortgages are very different from traditional loans. Hard money lenders don’t care about qualifications such as credit scores, but they do charge a high interest rate and require a large down payment.
This chart illustrates some of the key differences between traditional fixed-rate loans and hard money mortgages.
|
|
Traditional Fixed-Rate Mortgage |
Hard Money Mortgage |
|
Applying |
regular banks, credit unions, etc. |
specialized hard money mortgage brokers and wholesalers |
|
Credit Score |
usually 640+ |
no check |
|
Job Verification |
call to employer |
no check |
|
Income Verification |
paystubs, tax returns |
no check |
|
Down Payment |
20% or less with special programs |
35% or more |
|
Points and Fees |
varies |
varies, usually higher |
|
Interest Rate |
moderate |
very high (often over 10%) |
|
Term |
30 years |
often 15 years or less |
|
Prepayment Penalties |
varies |
can be very high |
See Also: