What Is Hard Money Lending?
Getting a loan can be a complex task for a lot of people. Between the credit score requirements, the paperwork, and all the requirements you need to meet it can be a real effort to get a loan from a bank. However banks are not the only legal institutions that can offer loans, and if you find that your profile does not meet the standards of your local bank you can still get your projects off the ground with hard money lending.
What is money lending?
A hard money loan is defined as a loan that relies on tangible collateral instead of your financial position. In short, when you as the borrower apply for a loan, the lender will take into consideration what you are offering in case you fail to make your payments instead of your job and income.
What are the advantages of hard money lending?
As we said above the first thing you need to consider is that your credit score and current aren’t as important to receive your loan. Where banks will scrutinize every aspect of your finances to ensure you can pay them back, hard money loans put clear collateral on the line and use it as a safety net.
This ultimately means that getting a hard money loan is considerably easier than the alternative. With a bank, there’s a real possibility that you’ll be turned down. More often than people who need the money are turned down because their current economy isn’t considered a safe investment for the bank. But if nobody is willing to support them then it’s next to impossible they’ll build the credit score the bank is demanding.
Since hard money loans have clear collateral in place credit score matters less, and people who got turned down by banks usually can get a hard money loan without issue.
Things to keep in mind
Hard money loans aren’t called that way just because they often involve tangible goods, they also tend to be harder to pay back. Interest rates are generally higher, and the loan period tends to be shorter. If you ask for a loan without a real plan to pay it back you’ll be in trouble, but this is true of any loan, even if you get it from a bank.
Also, it’s important not to confuse hard-money lenders with unregulated lenders. Hard money lenders are legal and are regulated by their respective state laws. When it comes to money, you shouldn’t take a gamble, and this means it’s important to know who you are dealing with. Look for lenders with a reliable reputation, like californiahardmoneydirect.net. A glance at their site shows you all the important credentials, and their reviews also check out. Don’t leave anything to chance, and make sure to get your loan from a regulated lender.