There are many different types of lenders out there and it can be a daunting task to figure out whom to go to when you need a mortgage loan. The last thing you want to do is jump at the first offer that looks attractive. For many people this choice may come down to conventional mortgage brokers and hard money lenders. Here is a closer look at how these two differ. Once you familiarize yourself with it you will be able to make the right choice.
Individuals and institutions
Most of the conventional lenders work for or with a financial institution. This seems to be the most common type of lender and can be handled by anywhere from one person to a large part of the institution. Where hard money lenders differ is that they very seldom deal with big companies. In the majority of cases you will see them as private individuals who finance the loan.
The type of home
The conventional mortgage broker will be able to supply you with a loan for any number of types of homes and will set up the terms and conditions accordingly. The aim in this case is to help people gain enough to either place a deposit for, or buy a home. People would do this for any number of reasons. With hard money lenders, they are more inclined to lend to people who are looking at houses that could serve as a potential investment. Another aspect would be whether the house is occupied by the owner or not. These kinds of houses usually come with more restrictions and prevent the lender from getting a large number of points.
Dealing with the law
Conventional mortgage lenders are familiar with the laws regarding the most common financial legal issues that they come across. In general they do not encounter many because of the flexibility of the terms and conditions. A hard money lender, on the other hand, often know these laws inside and out because they are met with problems more often than conventional lenders. This is because lending laws are changing and most of them favor the borrower. As such, it can be difficult for lenders to get all their money back if the borrower encounters a problem with repayment.