Would you offer your property as collateral for a loan? Private money lenders provide hard money loans to individuals seeking short-term repayment loans. The borrowing process is mainly in real estate, where the availability of ready financing is an advantage.
Private lending is an option when individuals cannot get traditional funding quickly. You can get the loan by contacting lending companies specializing in this type of transaction. Reach out to several lenders and discuss your needs to receive the loan as quickly as you need.
The contrast between hard money loans and traditional loans
- Hard money loans have terms of 6 to 18 months, whereas traditional loans are amortized for 15 to 30 years.
- Hard money loans are backed with the property as collateral, whereas the borrower’s credit and property mainly support traditional loans.
- Hard money loans are best suited for short-term investors, while traditional loans are for owner-occupied properties.
Hard money loans integrate higher amounts of interest rates as compared to traditional loans.
Pros and cons of hard money loans
Fast disbursement: An investment company lending hard money processes the allotment in a much quicker timeframe. The borrower gets the funding after the property details and ownership is authenticated.
Hard money lending doesn’t consider borrowers’ financial condition or ability to repay. It focuses on collateral value.
Flexibility: You can negotiate/tweak things with the lenders, e.g., repayment schedules.
Amalgamate high costs/ interest rates: The borrower generally pays a much higher fee. Hard money interests may end up leading the borrower to repay double the original loan.
Conclusion
Private companies lend you money as you offer a higher value property as collateral. Hard money lenders and investors are usually willing to lend the borrower money without a traditional mortgage lender. Hard money lending doesn’t have a stringent approval process. Although you can negotiate terms with different lenders, defaulting on your hard loan repayment means losing the collateral asset.
