If you’re new to investments or loans, the term “hard money loan” is one you’ll need to learn when beginning. These private money loans are the way to go for many reasons. For example, does your financial situation put you in the right place for a hard cash loan or hard money loan? Hard loan lenders can prove to be the better route for many people in search of commercial, residential, mortgage, or private loan needs.
What’s a Hard Money Loan?
You’ve heard this term thrown around and so as a borrower, you wonder if this could be a viable option for one of your investments. What’s the hard money loan definition? A hard money loan is in its truest definition, a short-term loan secured by real estate. There’s a key difference between hard loans and loans from traditional lenders. A hard money loan is instead backed by private investors. Hard money lenders issue short term loans. For borrowers looking to get investing quickly can use hard loans to do so. This grants the borrower money in a cash advance loan and an opportunity for an exit strategy. A hard loan is helpful if they are in the middle of selling and purchasing investment properties.
Traditional Loans and Hard Money Loans: The Real Difference
Conventional lenders will collect information on the borrower’s credit. This will include credit scores and credit reports. Traditional lenders want to conduct a thorough investigation on you to ensure your ability to pay off the loan. You might need a loan for a variety of different things, like a property, a business, a residence, a mortgage. Whatever the property type may be, choosing the traditional method to obtain a loan can be a tedious process. You might have blemishes on your credit reports, you rely on passive income, or have a low FICO score. These mistakes are even retained as credit reports keep information on file. The slightest hiccup can make going for a conventional loan or business loans from traditional lenders either impossible or too drawn out to be realistic.
How Hard Money Financing Works
Traditional lenders focus on your financial standing by analyzing your credit backgrounds. They seek out your credit score, only loaning to you if you are in good standing. What is the process behind hard loan lenders? Top hard money lenders actually do issue hard money personal loans on bad credit. There are also hard money lenders with no credit check. They do so by issuing short term loans secured by real estate. Borrowers looking at becoming investors, and in need of locking down a property fast could immensely benefit from a hard money lender.
These hard money bankers, such as us at Gelt Financial, aren’t as concerned about getting their money back. It’s because hard money lenders use loans secured by real estate, using the property as collateral. Hard money lenders are concerned with the value of the collateral they’ve collected from you, and when or if necessary, will repossess and then sell the collateral in order to get their money back. A loan from a traditional lender is unrealistic if you’ve struggled with a scarred credit history of credit card debt and bad credit. This is true even over a short period of time. Traditional lenders won’t entertain the application for property loans on your behalf.
As hard money lenders, we have dramatically different, client-friendly loan requirements! We pride ourselves on attractive rates and top tier loan values that allow our clients the ability to start investing…right away.