Tuesday, 23 January 2018

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The Hard Reality of Hard Money

Written by Posted On Thursday, 09 February 2017 08:54

Money is everyone’s problem nowadays. We all feel like we are falling short of cash every now and then, or at the end of each month to be precise. But problems arise when the cash you are short of is not a small, negligible cutesy amount, rather it is a large amount of crisp dollar bills that need to be secured. For whatever reason you would want the money, to pay off a debt, to buy a house, to pay your school tuition, etc., a loan is always helpful. A recognized corporation or institution will always be your first choice to get a loan from. But what happens when your request gets denied?

Hard money loans are usually what people opt for when the process of loan approval takes more time than expected or simply gets disapproved. Fundamentally, this type of loan is merely a loan secured by property and is short term because it needs to be paid off within 12 months. However, you could negotiate the time limit with your lender and stretch it out to a span of 2 years or more. Who is the lender? The lender is not affiliated to any loan granting institution, this makes it a private money lending and you will be agreeing to their policies rather than legally devised ones of a recognized companies.

There are different types of lenders out there. If you are looking for a loan, you could get the money on a property if it is valuable to your lender. The property could be an industry, a residence or a commercial one. Some hard money lenders prefer a kind of property or specialize in a type too. However, once you have decided the time limit and the property, monthly payments will be made and interest will be included. How much you will get depends solely on the value of the property.

But on an honest note, should you be going for a hard money loan? The answer is no and yes. You should not opt for this kind of loan if you have been granted a loan the traditional way, that is, an approval from your bank. If your history is good in terms of your civics and income, you should not have any trouble with it. However, if your loan is refused from banks and you need to close an urgent deal that requires money, you may go approach a hard lender. It is an option when all other doors are closed and ideal for people like real estate investors who need to take quick actions. And approval from the banks take time, which is not suited for their occupation.

Conclusively, hard money loans are only if you have been repeatedly rejected by organizations for loans and have lost all hope. But always remember, you are better secured and protected when you have been legally given the privilege by a trustworthy institution.

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