Using a hard money lender gives you more lead way with purchasing a distressed property, foreclosure or pre-foreclosure.  This is because they already know your intentions as most of these lenders (also known as private money lenders) are often investors themselves.

With hard money lenders the criteria is not as difficult as with a regular mortgage lender. This is because each loan is structured a little differently.

Mortgage Lender:

• Property is usually owner occupied or renter occupied
• Property has to be habitable before closing
• Will loan from 97% to 80% of the purchase amount depending on the loan
• They don’t allow borrower to take more money than asking price unless it is to cover closing and very minor repairs (repairs usually no more than $5000)

Hard Money Lender:

• Property is usually vacant
• Property is assumed to be distressed
• Will loan 65% to 75% of the estimated value of home after repairs
• Can borrow enough money for repairs and even loan payments as long as it fits within above range

They also aren’t as strict when it comes to credit. However, you should have good credit and do deals with the best interest of the lender and yourself because after all, you are both in it to make money. Post

It is also wise to check around before settling for the first hard money lender you come across. This is because not all of them offer the same rates and it would be better for you to find the one with the lowest. The rates can range from 9% to 16% depending on your credit. This is also true for regular mortgage lenders, but their rates are much lower because they are backed by government programs and therefore they go by the financial APR (annual percentage rate). Their rates can be as low as 4.5% to 10%, depending on your credit scores.