Hard money lenders offer loans that are a hybrid between a conventional loan and an unsecured loan. A hard money loan is specifically a type of asset based loan financing whereby a borrower gets funds secured against real estate. Hard money bridge loans are commonly issued by private hard money investors, individuals or companies. Although hard money lenders can be called lenders, they are not the same as traditional banks.

 

The primary distinction between hard money lenders and traditional banks is that a hard money lender is primarily concerned with the value of its collateral, i.e., the collateral that it offers to a borrower to secure a loan. Whereas the bank will primarily be interested in making a loan to the borrower based on the potential value of the collateral, a hard money lender is primarily concerned with the value of its collateral. This difference in the primary concern is what leads to some differences in the treatment of hard money loans and other types of loans. For instance, a traditional bank is not likely to insist that a borrower make an equivalent security in order to secure a loan. With the non-traditional nature of hard money loans, there is a greater degree of negotiation between the borrower and the lender regarding the amount of the loan as well as the interest rate and other terms.

 

Many hard money lenders do not deal with conventional borrowers. One of the most common types of hard money lenders is someone who buys a distressed property, renovates it, and then resells it to another party. A person does not necessarily need to own a home in order to qualify for this type of loan. He may also lend against his personal or business collateral, or he may even use the property as collateral for a mortgage. Regardless of the source of funding, this hard money lenders near me will require that the borrower provide a guarantee, which is usually a car or other valuable asset that is owned by the borrower and at least safe from foreclosure.

 

Since the borrower has provided security against lending, he will generally be able to obtain a higher loan amount than someone who does not have the same type of collateral. Because hard money lenders are considered to be high risk, their interest rates are typically higher than conventional lenders on the same type of loan. However, the rewards can be great as well as the risks involved in this type of investment.

 

Because of the potential for high profit and high risk, hard money lenders often charge very high interest rates. In addition, since the property is considered to be risky, the interest rates will often be much higher than normal rates. If a hard money loan defaults, the lender may be faced with a huge loss. In addition, because these loans often do not have any type of credit requirement, they have become much harder for people to obtain. Because of the risk involved with these loans, interest rates will vary greatly among different lenders.

 

Typically, borrowers that are dealing with hard money lenders are borrowers that have fallen into a financial hardship. They may have recently lost their jobs or had some type of unexpected financial setback. These lenders are primarily concerned with getting paid and do not want to take a chance on the borrower being able to repay the loan. This is why most lenders are extremely strict about credit history and require a great deal of proof of income tax forms as well as a complete and accurate hardship letter.

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