Taking a Closer Look at Hard Money Loans
While searching the web for lenders, a lot of consumers come across the term hard money loans. Perhaps they come across lenders that refer to themselves as Hard Money Lenders. What exactly is a hard money financier? The concept refers to hard assets being used as collateral for a quick loan.
There are a few important key pieces of information to understand regarding hard money. In the United States and Canada, hard money loans refer to those that use real estate property as collateral. This is because real estate is much more liquid than other types of assets. Also, consider that hard money loans are bridge loans. These loans are meant to provide capital for projects that run from a few months to a few years at most. They provide funds between traditional capital injections for a project. This is true for consumer and business projects alike.
So, what are some of the advantages of these types of loans? Speed is perhaps at the top of this list. A customer (or business) is typically able to achieve approval for this type of loan much quicker than with others. Requiring bridge funding in a short amount of time is what attracts most borrowers to these options.
Approval occurs much easier than with other lending formats. Think about it, the only real requirement to be met is the real estate collateral requirement. Many other kinds of funding will simply begin their process with collateral requirements. A laundry list of additional conditions typically has to be met beyond the collateral requirements. This feature is of interest to consumers that have credit blemishes. If the real estate collateral agreement is met, many lenders will not even run a credit check at all.
One benefit that these loans offer, due to the nature of their shorter terms, is a much higher degree of flexibility. Most other kinds of loans will require some level of underwriting to take place for the agreement to come together. A lot of these hard money arrangements do not require an underwriting process. This cuts out a very large portion of the overall process. Also, there should be much less red tape with hard money sources as they are less corporate in nature. The terms of a hard money arrangement might not necessarily be set in stone. Longer term loans are typically going to have unwavering terms, however.
While certain benefits can be enjoyed through hard money lending, the grass isn’t entirely green on their side of the field. The interest rate is typically going to start at ten percent. It could be much higher than this depending on the lender. Let’s not forget that the shorter nature of the hard money arrangement might result in the borrower having to pay penalties if he doesn’t pay the principle off in time. While these lenders are more flexible on average, extending the terms too long after the initial plan will naturally result in penalties and additional interest costs.http://www.financelevel.us/loans/taking-a-closer-look-at-hard-money-loans.htmlhttp://www.financelevel.us/wp-content/uploads/2018/09/Thrive_18_08_178-1024x673.jpghttp://www.financelevel.us/wp-content/uploads/2018/09/Thrive_18_08_178-300x300.jpgloans