When to Turn to a Hard Money Lender

You might start at big money lenders when you need funds to renovate your home or build an addition, but you might find it much easier to pursue a loan from the best private money lenders. Visiting private money lenders for owner occupied loans makes more sense because they make risk exceptions more often than the major banks. You should also try your local credit union if you have an account there.

On the other hand, if you want to start flipping houses, you need a hard money loan. Shop around for these loans since you need to watch the hard money closing costs and hard money fees on these loans. If you need to make a purchase immediately, so you can purchase a home you do not want to miss, take out a bridge loan. This source of quick funds provides the money to purchase one home while another remains for sale.

The United States is known for its many money-lending services, and Americans may often get loans for anything from a college education to a car or pickup truck to a mortgage on a home. In other cases, an American may use their current possessions as collateral for a secured loan, such as car title loans or pawning off an item at a pawn shop. Pawn shops, despite being called “shops,” are most often used for money lending services based on the value of offered items. And while car title loans are based on the borrower’s car title, a hard money lender is interested in property and real estate that the borrower has to offer. Just what is hard money lending, and when is this the right choice for real estate loans or fix and flip loans? Someone looking for a hard money lender in Georgia, for example, may look online to find them in their area, whether in Atlanta or beyond. A hard money lender may never be far away.

The Basics of a Hard Money Lender

This industry has a lingering stigma on it due to dishonest practices among hard money lenders in decades past, but borrowers should note that these previous abuses are no longer practiced. A hard money loan is safer and more honest than in decades past, and for some borrowers, a hard money lender may in fact be an attractive option. In the state of Georgia, many such lenders may be found, as many as 50 of them in Atlanta alone.

According to ReTipster, a hard money loan is a private loan based on the value of the borrower’s property. Although the borrower’s credit score may factored in this exchange, the hard money lender is most concerned with the borrower’s property value, which may dictate the size of the loan. Such loans may be both easier and faster to obtain than those from commercial lenders such as banks, and a hard money loan may be funded within a week (as opposed to 30-45 days from a bank). Not just anyone should make use of hard money lenders, but Americans who have poor credit or were turned down for a bank loan may consider this option until they have a chance to improve their credit score.

Loans from a hard money lender will often be provided and paid off in a short time period, often as short as 12 months. This rapid repayment period may result in a high interest rate, higher than those found in bank loans. In some cases, however, the borrower may ask for and receive a loan period of two to five years on their hard money loan. All sort of real estate may be used for such a loan, and residential houses are one such option. Hard money loans may be done for industrial buildings as well, or even for pieces of land. It should be noted that not all hard money lenders will be this flexible; some of them may deal exclusively with certain property types and refuse to give loans for the other types. Someone interested in a hard money loan may want to ask nearby lenders what sort of property they will accept as collateral for a hard money loan.

As mentioned above, hard money loans are not a necessity, and someone who is able to get a loan from a bank is encouraged to do so. Hard money loans are more suitable for borrowers who either have poor credit or don’t have time to wait for a bank loan to get approved and funded. Land loans and construction loans are other scenarios where a hard money loan may be taken out. Credit issues and foreclosures are other reasons to look for a hard money lender, and someone who just started a new job may not have enough proof of income to satisfy a bank. But if that person’s property has solid equity on it, they may get approved for a hard money loan. They may especially want to take this option if they are working with a tight time frame and can’t wait for a bank loan to come through.

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