Hard money land loans are a bit more difficult to get than a regular home loan because the pledged collateral is bare ground; sometimes improved, sometimes not so much. The missing item on a bare land loan in order to make it more attractive to the money person would be a single-family residence, one to four units, or a commercial building on the property to increase the lender's security.
Does A Borrowers Credit History Enter Into Who Gets Hard Money Land Loans?
Yes. A prospective borrower with a 725+ FICO is not going to be knocking on the door of a hard money lender for property improvements or a construction loan. They’re at their favorite bank getting VIP treatment. The person who gets hard money land loans is one who has marginal or bad credit. They will get a cup of stale office copy and consequently pay the price for the borrowed money.
What Kind Of Loan Fees, Interest Rates, And Terms Are Available?
Actually, it depends. What a borrower still owes on the land is critical. Example: If land appraised value is $100,000 with no liens or encumbrances you’ll be in business to get decent loan rates and terms and all the fresh coffee you want. On terms, think 9 percent interest plus two points for a 12-month hard money loan.
Can You Give A Ballpark Figure On Rates And Terms?
In the above paragraph where the property is free and clear, that borrower will be put in the good loan paperwork stack for a hard money loan. Another consideration is the development construction cost of any future project to be placed on the land.
