Chinese (Simplified)EnglishGermanSpanish

Busting myths about hard money loans

Feb 14, 2018 | Article, Blog

There are plenty of myths about hard money loans and this could be stopping you from getting benefits out of your loan. Maybe you are afraid to consider a hard money loan for your investment needs. It is time to take a closer look at these myths and learn the facts about these loans.

Hard money lenders are not reliable

Contrary to beliefs, hard money lenders are not shady people who offer loans under inscrutable terms. Rather they are individuals as well as groups that offer their own capital as a loan. Some lenders may borrow loans from banks even, to get you the capital you need. Their services are indispensable for people who want to invest in property but for some reason cannot find a good loan from a bank.  As with any lender, you need to research their background and their loan terms to find the best lender.

Hard money loans are used primarily by people with low credit score

It is true that when you have a low credit score, most traditional lenders may refuse to offer a loan to you. Therefore, you might want to approach a hard money lender. However, these are not the only borrowers who use hard money loans. These loans can be used by any investor who owns or wants to invest in property.  Also, while hard money lenders are less likely to be influenced by your credit score, they do want to ensure that your property will offer good returns. Thus, they will give you a loan once they are sure that the property will generate revenue or profit on renovation, rent, or sale.

Hard money loans are expensive

While hard money loans do have higher interest rates than bank loans, investors consider this worth the benefits offered. A hard money loan is processed within a few days, as opposed to a bank loan that can take weeks to be approved. This ensures that investors do not miss any good opportunities.  If you have spotted a good property on sale, and want to buy it fast, you might as well pay a higher rate of interest than lose the property to another buyer.  Also, during the time that the property is not generating revenue, you can pay only the interest.

Hard money lenders have tough conditions

Hard money lenders are also investors in property so they want to maximize their revenues. They have more customization choices for every borrower once they spot a good investment. If your investment is sound, you will find more moderate loan conditions. Also, if you are unable to make repayments temporarily, for any reason, you can negotiate with the lender for more leeway. As long as the lender is sure you can clear your debt, you will find them easy to work with.

It is difficult to get a hard money loan

Hard money loans are approved quickly. Also, the property is the collateral, and often, the only consideration. As long as you have a good investment in form of property, you can easily get a hard money loan.

Source : www.californiaprivatemoneylenders.com

Have More Questions About This Article? Feel Free to Contact Us.

11 + 4 =

Basics you need to know about fix and flip loans

  So, what are Fix and flip loans?   Let’s go through the things you should know if you want to start flipping or if you are just interested in learning more. Fix and flip is a real estate investment strategy and it consists in purchasing a property in need of...

Covid-19 and Commercial Loans Trends 2021

What is the biggest challenge you anticipate in 2021 as a direct lender or financial intermediary in commercial real estate? In 2021 it will be challenging to meet the business needs of Borrowers using hotel/restaurant properties as collateral to secure their loan. In...

Small is Beautiful: The Revival of US Rural Areas

Year of 2020 was no like other. It looks like the Covid-19 pandemic sent the crowded urban life style preferred by many bohemians and younger professionals in the past as new migration trends are identified by moving companies. BTW: Moving industry is the one sector...

Construction Loan Programs: The 3 Key Benefits to Consider

The purpose of a construction loan is to finance the building of a new residential real estate property. The projected market value of the subject property is used to secure the lending and the loan proceeds are distributed by the Lender via separate “draws”....

10 Common Pitfalls to Avoid in the Fix-and-Flip Process

Fix-and-Flip projects are generally seen as promising business opportunities that can generate quick cash profit and good return-on-investment (ROI). An entrepreneur may need to completely transform a property or simply do some tender renovations before the building...

Real Estate Investment Strategies: Fix-and-Flip or Buy-and-Hold

Many real estate entrepreneurs are purchasing properties with the idea of receiving good return on investment for their cash and increasing their wealth. A business person can choose to implement both the Fix-and-Flip or Buy-and-Hold strategy and the decision depends...

Our Success Story: 130 Coolwater Lane, Barstow, CA 92311

Universal Commercial Capital (UCC) focus is on finding the right financial solutions for customers that may experience issues with obtaining a business purpose loan from lending institutions as banks. Our team is dedicated on assisting each and every Borrower receives...