subject: HARD MONEY LOANS: AN INTRODUCTION [print this page] HARD MONEY LOANS: AN INTRODUCTION HARD MONEY LOANS: AN INTRODUCTION
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds that is secured by the value of a parcel of real estate. They are typically issued at much higher interest rates than conventional commercial or residential property loans and never issued by a commercial bank or other deposit institution.
Hard money loans are more expensive than traditional loans because they are not based upon traditional credit guidelines that protect investors and banks from high default rates as money lenders may not require the income verification that typical lenders require. Also, they experience higher default rates and, thus, charge a higher rate of interest. Individuals and companies may opt to take this kind of loan when they cannot obtain typical mortgage financing because they do not have acceptable credit or other documentation typically required by a conforming loan.
There are many advantages of utilizing hard money loans as these loans are readily available, when money is often tight with conventional loans. These loans are to close much faster and with less paperwork. This allows real estate investors to take quick advantage of good deals before other investors can.
If you decide that hard money loans are a good option for you, then the next step is applying for one. You must fill out a loan application much like a regular conventional loan and provide all relevant data on your financial situation as well as on the property. Include all relevant details on the deal in your loan package that will speed up the process. Hard money or private loans are more relational than regular loans, so take the time to build long-term relationships with private loan brokers and investors that will make the process smoother in the future if you have an existing relationship. This kind of loans varies greatly in fees and interest rates, so shop your loan around to get the best deal. As this kind of loan is always a risky venture, and it is always preferable to obtain the debt relief that can be negotiated by a qualified consultant. Seeking a hard money business loan is to try to settle existing financial problems just digs a deeper hole for your enterprise and it is better to get the advice of a skilled financial counselor who will advise you regarding the real options available to reorganize your financial obligations.
Lenders online offer equity funding do not all use investors for funding which means that investors do not have to approve the funding while some have other sources such as their own capital and major banks. These types of hard loans are easier to get an approval on and usually have a fast turnaround time on getting the fund. Getting pre approved through an online application makes the process faster. Online applications are usually easy to fill out but for assistance most sites have instant chat with an account representative or they may have a toll free contact number. Online applications through lenders online usually require the business name, phone number; start up date, type of business and email address.
