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.
About Us:
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.
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