Hard Money Loan VS Traditional
The difference between getting a traditional loan and hard money loans is that a hard money loan allows the borrower to procure a loan from either an individual or an investor, in return for using the property as a collateral. Unlike traditional loans that can take FOREVER, hard money loans in some cases can be in as little as 24 hours. When traditional lenders will not approve a loan based on the property or situation, then a hard money loan may be the only option. Private Money Lender has a list of lenders for all your hard money needs.
It’s All About The Collateral
A hard money loan is more desirable because you can get your money quicker! A lender is less interested in your credit profile, and more interested in the collateral they are investing in. The loans tend to be much more flexible , and are a perfect option for those who want to fix and flip. The LTV’s on hard money loans tend to be lower, some even as low as 50%. So, you will need assets to be able to qualify for hard money.
With hard money loans an investor is going to lend based on the collateral. For example, if you want an investment property, the loan is based on what the property is worth and not so much on creditworthiness. Credit is less important to an investor, some may not even look at your credit at all. They do usually care about your finances though (you still need to pay the loan back).
Quicker Profits Please
Even though it seems that getting a hard money loan is easy, there are some downfalls. A hard money lender will use more conservative methods to value a property, and because a hard money loans are more expensive, profit must materialize as projected as soon as possible in order to get the loan paid. These loans usually have a shorter-term length and that is why they are a great option for those needing hard money loans to fix and flips.
It is important to know where to find quality investors that you can trust by going to Private Money Lending Guide’s list of lenders that will fit your needs. Make sure to reach out to more than one or two lenders, build a report and open communication as well as discuss your specific needs, this could turn into a business relationship you may need again, using Private Money Lending Guide’s directory of lenders that fit your needs.