Many of us learned about the term hard money lenders. The question arises what does it means? Who are they? What are their objectives? I will try to answer these questions. First of all what is meant by hard money? When the money is in investor’s hand, it is referred as soft or hard money. Soft money means the money is lent on soft and flexible conditions and hard money means the money is taken as a loan on strict and hard rules. Now the hard money lenders are the lending companies that give you special type of real estate loan on strict rules and regulations.
Hard money lenders provide short term loans. They do not provide long term loans or much money for your requirements. They provide loans on high interest rates as compared to others lending companies. They do not require income verification from you. Most of the hard money comes from individuals not by companies. They provide only loan to you up to 70% ARV (after repaired value). This means that a hard money lender can loan you up to 70% of what the home is worth in repaired condition.
Now below are some merits and demerits of Hard Money Lenders, which can make the clear review of all what happening.
Merits of hard Money loans:
Since hard money lenders do not require income verification so it is easy for an individual to qualify for a loan and fulfill his business needs as many people do not want their income to be verified by third party or any individual. Taking loan from hard money lenders is an easy task as it does not require lengthy underwriting process and heavy documentation. Another advantage is that hard money lending is a fast process so it saves time of customers applying for loan.
Demerits of hard Money loans:
There are also many disadvantages of hard money loans. Firstly there are many hard and fast rules for taking loan. So if anyone interested in hard money loan then he or she must follow and fulfill these conditions. Secondly the interest rate is much high as compared to other lending companies so if someone is willing to pay back the huge amount as an interest he may apply for loan, obviously nobody likes this. Hard money is not useful to you if you are interested in taking large amount of loan for your business. They only offer short term loans.
Equity Coalition, LLC is one of the hard money lending company headquartered in San Francisco, California, specializes in structured real estate finance providing private equity and mortgage loans to facilitate Real Estate acquisitions and investments nationwide.