What is Hard Money Lending and What Are Its Benefits
There are basically two types of money lenders- traditional lenders who follow some standards to provide loans and soft money lender who have flexible terms to provide loans. Soft money lenders are mortgage companies, banks and other institutions. Hard money lenders are some private companies and individuals.
Who can lend you hard money
As mentioned earlier, these lenders are some private institutions that can provide you loans for short terms. Private lenders can be individuals or institutions. More often than not, these loans are used as bridge loans till you can secure permanent loans.
The terms of hard money loans
The loans work similar to bank provided mortgages. You will have to give the lenders an asset for collateral. Even hard money lending needs an asset for security so that if you default on your loans, the lenders can claim your asset. The loan is provided for short term. The interest rates are relatively higher.
The benefits of hard money loans
Lesser paperwork
Hard money lending requires less paperwork than soft money lending. Unlike banks and financial institution that follow a certain standardized procedure to approve loans which entails a lot of documentation, private lenders will be able to provide you the loans without much paperwork.
Quicker loans
You will almost get the loan money immediately once you apply for this kind of loans. As the documentation is also less, you may expect your loans within a week or two. Some lenders wire your escrow company loan money even within 6 days time which makes it even easier for you to obtain it.
Invest faster
You can invest on the house property on which you have an eye faster with hard money lending. The loans are tailor made for the needs of real estate investors who would be in need of money every time they want to invest in a new property.
Pay off other debts
You can use the loan to pay off your other debt obligations that require immediate attention. You can make payments on your financial commitments that are due. Your credit card loans, your vehicle loans, your education loan etc that is of high importance can be paid off with these loans.
Bridge loans
The money can be used as bridge loans to purchase a new property when you still haven't sold your current house property. This will bridge the gap between the price of your new home and selling price of the old home.
Terms can be negotiated
You can negotiate the terms of your loans with your lender. As the loan provider in case of loans gives more importance on building relationships, you can negotiate the interest rates and the repayments.
For a hard money lender what really matters is that you go back to him again when you are in need of money. So if you are loyal, he will be able to relax some payment conditions for you.
Who can lend you hard money
As mentioned earlier, these lenders are some private institutions that can provide you loans for short terms. Private lenders can be individuals or institutions. More often than not, these loans are used as bridge loans till you can secure permanent loans.
The terms of hard money loans
The loans work similar to bank provided mortgages. You will have to give the lenders an asset for collateral. Even hard money lending needs an asset for security so that if you default on your loans, the lenders can claim your asset. The loan is provided for short term. The interest rates are relatively higher.
The benefits of hard money loans
Lesser paperwork
Hard money lending requires less paperwork than soft money lending. Unlike banks and financial institution that follow a certain standardized procedure to approve loans which entails a lot of documentation, private lenders will be able to provide you the loans without much paperwork.
Quicker loans
You will almost get the loan money immediately once you apply for this kind of loans. As the documentation is also less, you may expect your loans within a week or two. Some lenders wire your escrow company loan money even within 6 days time which makes it even easier for you to obtain it.
Invest faster
You can invest on the house property on which you have an eye faster with hard money lending. The loans are tailor made for the needs of real estate investors who would be in need of money every time they want to invest in a new property.
Pay off other debts
You can use the loan to pay off your other debt obligations that require immediate attention. You can make payments on your financial commitments that are due. Your credit card loans, your vehicle loans, your education loan etc that is of high importance can be paid off with these loans.
Bridge loans
The money can be used as bridge loans to purchase a new property when you still haven't sold your current house property. This will bridge the gap between the price of your new home and selling price of the old home.
Terms can be negotiated
You can negotiate the terms of your loans with your lender. As the loan provider in case of loans gives more importance on building relationships, you can negotiate the interest rates and the repayments.
For a hard money lender what really matters is that you go back to him again when you are in need of money. So if you are loyal, he will be able to relax some payment conditions for you.
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