Hard Facts About Hard Money Loans Every Borrower Should Know
Your credit score is not so high and you're not quite sure a traditional lender will give you the time of day because of it. Or, maybe you don't necessarily have a stable job or proof of employment and income and you are fairly certain a financial institution will not take you seriously. Whatever the case may be, hard money loans is one thing you should keep in mind.
Hard money loans involve getting a loan based almost entirely on what you can offer as collateral and not on those other usual factors, which makes getting these loans a fairly straightforward process. However, before you skip off to find a lender to give you the hard money loan you want, there are some hard facts you need to know before you go.
Hard money loans are easy, but there can be higher costs involved.
The biggest draw with hard money loans is the fact that just about anyone with valuable and tangible property can qualify for the money they need without all of the digging around into their credit history or personal financial situation. However, because lenders are carrying a higher risk of nonpayment or default, there are usually higher interest rates and fees associated with the process. For most borrowers, this higher cost is well worth it to get the funding they need without the hassle.
The application process is simple, but you must have properly owned and documented property.
Say you need a loan of a certain dollar amount and you have a car that is fully paid for that you know is well worth double that amount in market value. If this is the case, getting a hard money loan with the vehicle used as collateral should be simple. However, before you head to the lender, you must make sure you have documentation to prove the vehicle is owned by you and does not have other lienholders listed on the title. Otherwise, you could be turned down until you get the proper documentation.
Repayment terms with hard money loans can be more flexible.
Because you are offering collateral to cover the amount you borrow, the lender knows that they can recoup what you borrow if you don't pay back the loan. Because of this, the loan terms can sometimes be a little more flexible than you may expect. If you would prefer to make bi-monthly loan payments, for example, it might be possible. Make sure you keep this fact in mind when negotiating the terms of your hard money loan so you end up with a plan that works best for you.
Share
