Hard Money Lending: Another Good Financial Option

A lot of people are forced to turn to some unique, nonstandard and risky option when the bank or financial institutions solutions don’t work. These is  commonly known as hard money lending and you’ll most likely be working with a hard money lender specializing in that practice. This type of financial solution is not very unusual these days especially when a lot of people are already forced on the wall. This has been the option for many people, and it has shed a fairly unexplainable and unfairly assigned shady and risky status.

This kind of financing is very easy and direct, just like other companies that want to make a small profit. Today, even home owners will have a hard time acquiring a loan from banks and other traditional financial companies. When banks and financial institutions decline the loan application of homeowners, they will obtain a hard money loan. This type of loan is a secured loan where an asset is used as collateral to the loan amount.

The hard money lenders are the people or companies that offer these asset-based loans. These companies can produce the amount of money for a short time period. Moreover, they demand slightly higher interest rates than banks offer. Furthermore, the amount of loan is determined by the lenders based on the current market value of the asset pledged as collateral.

The amount of money that the borrower will get from the loan is usually 60 to 75 percent on the market value of the property. This value refers to the amount for today’s purchase price of the asset. It could also mean the amount of money that the lender can expect to earn when the property is sold in case of a loan default.

The hard money lending is not always the first option for many people because these loans are rather more expensive than standard loans. This is because they are not being determined by traditional credit tips that protect traders and banks from high interest rates. Most of the time hard loan lenders do not need proof of income or check the credit history of the borrower. It is the property that the lenders care about when a person applies for such loans. Because of this ease of application, hard money lenders have higher interest rates and default costs because they think it is justifiable.

People would end up getting hard money lending as a tool to meet their financial need. However, debt is a serious matter. Any hasty decision in getting this kind of loan can end up to foreclosure of the property. Hence, make sure that you evaluate your capacity to pay and set a limit on the amount that you will borrow in this type of financing.

Top Reasons to Consider About Hard Money Lenders and Hard Money Loans

A lot of investors who run out of luck with loan with loan applications in banks and other traditional financial institutions would find themselves looking for other options. Most of the time, people who are pushed to the wall would run to hard money lenders.

These lenders offer a type of financing called hard money loan, which is asset-based. Most of the time, lenders of hard money would assess the value of the property for which the loan is being made. If lenders think that the asset to have a great potential, then the loan application is likely to be approved.

There are various reasons why people consider getting hard money loans. They are the following.

Application process is fast. The loan amount can be made available after 5 to 14 days after applicant submit all important documents.

The required documentation is very low. The funds are based on the value of the property. Hence, only the property matters most for hard money lenders, unlike traditional lenders.

Borrowers with bad credits are welcome. Foreclosure, bankruptcy and FICO scores are not a problem when applying for hard money loans.

Foreign nationals are allowed to get a loan. Non-US citizens or other foreign nationals can easily get a hard money loan, but they will be have a hard time getting a loan from traditional lending institutions.

Lenders of hard money will lend on high risky deals. Non-profit organizations and churches can avail of hard money lending too. Such organizations are not usually granted a loan with traditional lenders, which are concerned to get bad publicity when they will foreclose a church loan.

Personal guarantees are not required. Hard money loans are based on the value of the property. Therefore, there is no need of personal guarantees unlike banks that always require one.

They offer flexible loan to values. Lenders of hard money are more flexible than traditional lenders because the lenders of hard money will decide what loan to values will be accepted based on their interest for the project, equity participation and more. Banks and other traditional lenders will reject a loan if the loan to values is too high.

Subordinate liens are acceptable. Hard money lenders will lend money regardless of the position as long as there is the value for the property. Banks may lend on a second, but not a third position. Traditional lenders always want to a first position.

How to Deal with Hard Money Lenders?

If you are planning to invest some money in estate, you will require some stable funds. But there are situations when you do not qualify for the bank loans and it gets really difficult to obtain the finance you need. Do not get sad as there is good news! Fortunately there are some great Hard Money Lenders which are great alternatives to these banks as they are always ready to provide the loans or for the financial assistance.

The Hard Money Lenders are unlike the traditional lenders who will not look at your credit history or financial condition. What is important for them is that they approve or reject the application simply on the basis of your asset. They are asset based and simple looks that the property you have is whether having an attractive deal or not and if they find it attractive, they provide the loan instantaneously.

Also negotiating with these Hard Money Lenders is quite easy than the typical institutionalized money lenders. You will not be required to stand in the queue just to talk to the manager or the person in charge or you will not be required to deal with the tough loan processing team and applications and forms. And the greatest benefit is that the borrower is not required to wait for days or months just to know whether his application is accepted or rejected. The Hard Money Lenders asses the eligibility of the loan applicator within days and mostly it is accepted.

To deal with the Hard Money Lenders, first you need to find them and unlike the traditional companies they do not have the storefront offices. A good strategy to find these is to ask around. You never know you will end up having a neighbor who is a Hard Money Lender and talking or dealing with a neighbor will not be an issue.

Also get to know more about these Hard Money Lenders through your office colleagues and they would point you to right direction.

While the most favorite option of the people is to search online. It is better to know about the hard money lender through somebody as you will get to know more about him but if you are reluctant to take help from anyone then make a search ion internet yourself.