Hard money lenders are not as well-known as the conventional lenders, but their popularity is on the rise. This is because more and more people are giving this option a chance. As with any loan, there are advantages and disadvantages. On the one hand you will be able to get the money you need quickly, but on the other hand you will end up paying much more than the actual loan cost. If you ate thinking about going down this road then there are a few things you should know.
What is hard money lending?
Hard money lending is basically the lending of hard money, hard money in this case is money that is hard to come by. This basically means that if you apply for such a loan then the chances that it will be successful are not that great, especially if you have a bad credit history. Soft money, in contrast, is money that you can get hold of easily through a loan. The terms and conditions of these are much more flexible so more people are eligible.
Know the laws
Hard money lenders generally deal more with investments rather than funding anybody who needs a loan. This means that they will do everything they can in order to get their money back with the profit that comes with it. It is common knowledge that many people who take loans cannot pay the amount back and there are new laws in place that can help them. This makes life for hard money lenders very difficult and you can imagine the potential losses that they can suffer. As a result they are very clued up on the laws that govern borrowing and lending. Before you think of taking such a loan, ensure that you will be able to pay it back so that you don’t have to be stuck with even more debt.
The easy way out
As bad as it may seem, hard money loans are a good way if you are looking to get money quickly. Even though there are rigorous rules and conditions attached, it is worth it if you know that you can pay the loan back. This is a particularly good source of finance if you are looking to embark on an investment.