A Quick History of Lenders

What Is A Hard Money Loan? Basically, hard money loan is a specific type of asset based loan financing in which the borrower receives funds that’s secured by real property. Typically, hard money loans are being issued by private companies or investors and the rate of interests are often higher compared to traditional residential or commercial property loans. This is due to the higher risk as well as short duration that come with the loan. A big portion of hard money loans are utilized for projects that are lasting for months to years. This kind of loan whether you believe it or not is much like bridge loan which has the same criteria normally for lending and cost to borrowers. The major difference here is that, bridge loan is referring to investment property or perhaps, commercial property that may be in transition and does not yet qualify for traditional financing whereas hard money means not only the asset based loan with high interest rate but the possibility of distressed financial situation such as arrears on existing mortgage or where foreclosure and bankruptcy proceedings occur. Hard money lenders always care on the property and ensure that they’re in a strong position and is less about borrowers. Documentation of income – this is a very popular reason why many borrowers are applying for hard loans. And much like to bad credit, it may be hard to get financing if you can’t prove your income. As for the borrower, they have to deal with losses from investments few years ago and they’re still writing off recent tax returns.
Understanding Loans
On the other hand, hard lenders care less about the income of the borrower and know that self employed debtors usually have more income than what they can show. Mostly, financiers of hard money would like to see solid deal and money in the bank. And after conformation that the payments to the loan would be made according to the cash that the borrower has, the lender will then do the deal.
Understanding Loans
Timing – this is actually another known reason why people opt to work with hard lenders. Deals can get done fast and truth is, they can be done within days. Timing option can also make the offer become stronger for the buyers and having a quick access to cash is giving buyers more confidence of making plenty of low offers. Comfort of doing business – even if you are qualified for traditional financing, getting an approval is still hard. The underwriters keep on searching for ways on how they can reject the loans and as a result, it takes a while and requiring lots of documents. Not like hard money lenders, they look at the same documents but it’s much easier to work with them and they do not try to kill the deal.