Looking by its name, the term “hard money,” rings a lot of odd bells in our head, but rest assured that oddness is only limited to its name.
So what even does this term “hard money” that has spread far and wide in our current social circles mean? Putting it in frame, it is a short term loan that provides money to the borrower, which is then secured with property.
HOW DO HARD MONEY LOANS WORK?
The way that hard money loans work is pretty easy to understand. Since it is not a traditional type of loan which is called as a soft loan, a lot of people get suspicious with how hard money loans work.
Hard money loans are supposedly lent out privately, outside the traditional banking, by private individuals or private organizations that lend hard money. Hard money loans are usually searched by those who plan to renovate and resell the real estate that is used as surety for the financing. Most hard money loans are for one to three years – and by some of the other advantages, they offer.
NOW FOR THE BASIC QUESTION; ARE HARD MONEY LOANS SAFE?
“Is hard money loaning a good idea?”
“Is it safe?”
“Is the lender authentic?”
These are some of the very frequently asked questions among the borrowers. Want to know some plausible answers to these questions of yours? Well then let’s get right into it.
Having second doubts with hard money loans is a very humanely nature because it is lent privately and without any lengthy procedures in contrast to traditional loans, to most of us, this term reeks of scams.
Okay so we will start with the first asked question:
- IS HARD MONEY LOANING A GOOD IDEA?
While hard money loaning is very vast spread and usually done by many people but the ones specifically do it with low budget credits and past bankruptcy. While the traditional loaners like banks test you with your strong credibility and safe deposits hard money loners are rather easy to deal with because they are interested in your ability to pay they are more interested in the value of that house.
Alongside, it is also essential to keep in mind that it can be expensive to those with poor credit. You can be asked to pay an interest of about 6% to 15%. However, if you are in urgent need to buy a house or else you might lose it, then hard money loan is a good option for you. Other than that, hard money loan is slightly less problematic for the ones with good credit.
- IS IT SAFE?
To start with the fact that a hard money loan is a great way to get a short term loan rather easily and quickly, but it does have its pros and cons. Moreover, to say that hard money loans are entirely safe would be a white lie, but there are always ways to get them through information regarding it.
Hard money lenders and loans are private loans which are not in any way associated with your ability to repay. They are more interested in the property which is being kept as an asset to them in exchange for the borrowed money.
Since the lenders are not interested in your private possessions and your regular income, so they don’t put you through a lengthy process. Unlike traditional loans, while you need to deposit before you receive the hard money loan works differently, it takes the property as their asset and lends you the money, so it is rather easy to know that till you are not going anywhere your money and the lenders aren’t leaving as well.
Considering the worst-case scenario possible, because we human beings surprisingly have a high tendency to end up in a worst-case scenario. In case if you resell the house or default in any way, they might reclaim the property or your asset back. The value of their asset is much more important to them than your financial standings.
- IS THE LENDER AUTHENTIC?
Now to borrow money, people look for authentic and hard money lenders. While the term “hard money lenders” comes off as a proper term which looks like something that wouldn’t be easy to find but sit back a little people it isn’t as hard or scary as it sounds.
Hard money loans are a hugely trending term nowadays in the finance world. While in earlier times it might be webbed with many scams but nowadays there is an immense amount of authentic hard money lenders made as an organization which can be researched thoroughly before investing. Living in the 21st century, it is rather easy to get your researches done before investing in anything.
Alongside the fact that the hard money is accessible among the investors’ many sites has been created to search for your respected area hard money lender for example if someone lives in Houston they will search for trusted hard money lenders in Houston, and they can quickly come across the respected organizations within Houston, Texas. Though a lot of hard money lenders have been emerging from different states lately and Texas being the most popular among the states has shown great sign of trustworthy hard money lenders setting up organizations especially in Houston and Dallas.
So to wrap up this whole discussion, we can all agree to the fact that let’s try to live a loan less life to be spared from reading these lengthy articles.
However, coming to the point again in all of this conclusion, it is rather clear that there are many ways to do your research for authentic and safe transaction of hard money loans. Since the secure transaction is in most percent possible and knowing that everything has their pros and cons cannot be considered as entirely unsafe or entirely safe.