In times of economic stress, many people look for a loan to be able to pay their bills until they can get their paycheck or receive another source of income. When people think about loans they usually think about a loan from the bank. But there is actually an easier and more fixed type of loan that you can receive – this is the hard money loan. Here is a quick explanation of what exactly a hard money loan is, and some other specifics that you should be thinking about before you sign up to get this type of loan money.
The first hard money loans questions you might have is how quickly you can get this loan. You can actually receive this loan very quickly – in about a week. Compared to traditional loans like from a bank that can take over a month, this can be a very attractive offer if you need cash quickly. Another thing you need to know about this loan is that it involves real estate collateral such as your home, your retail properties, or any other property you may have. This loan is also secured by individual investors – it is not through a bank or an institution.
Another hard money loans questions you might have is if it is easier to get this type of loan over conventual loans, and the answer is yes. In conventional loans, a bank or a loaning agency will look over your credit history and your credit score to find out if you are creditworthy enough to get a loan. With a hard money loan, your collateral is your credit score. You should also know that because you are putting up collateral if you do not pay off the loan then you will lose your real estate property. You should also be thinking about the interest rate that you will be charged on top of your loan amount. Different places have different interest rates. Generally, hard money loans have smaller interest rates than traditional conventional loans from a bank.
Investors in these types of loans look into how much equity you have in your collateral real estate property. If you only have small equity into the property, then you will get less money and higher interest rates compared to if you owned the real estate property in full. Finding a hard money loaner is quite easy. Simply do a quick google search in your area to find reputable companies. Make sure that you do your research beforehand to make sure that you are using a company that is properly licensed and also has a history of good reviews from previous customers. These loans can also be used to fund future business projects as well, not just financial hardship.
Using a hard money loan can work well for you depending on your financial condition. If you have good real estate property to offer as collateral, you will have better offers generally than what a bank will offer you. It can also be good if you have a bad credit history or a bad credit score. Using hard money loans can be quite easy as there are companies that offer them.
Attempting to fund a future business project or experiencing hardship in your financials can be a difficult task. Using a hard money loan is a quicker way to get money and can also be more flexible than a traditional bank loan. When you are using a hard money loan company, make sure that you are using a reputable company. Hopefully, now you have more understanding of this.