Hard Money Personal Loans Defined?

Not to stereotype or anything like that but when I think of hard money personal loans, I think of the old fashioned loan shark that we all got to know in those movies made in the 50’s. As far as these types of loans go, in their true sense, they are very hard to come by. There are not any financial institutions or banks that will make a personal loan to anyone with bad credit or is in a financial crisis. That is going on my definition of a personal loan, which would be a loan on your signature and promise to pay only. These signature and promise to pay loans are available on a business level, and they are called bridge loans, mostly to fund a project and the lender is betting that the project pays off. For a hard money personal loan, be prepared to put up some type of collateral.

The hard money lenders are usually private parties and they want as much assurance that the loan will be paid as they can get. It is very common to fund a hard money loan with real estate for the collateral. Although, there are certain instances when you could put anything you own that is of value up for collateral on hard money loan. This will all be up to the lender and just how creative he feels like being on this particular situation.

When you are looking for hard money personal loans, you should be aware that whatever you’re collateral is, you will only be able to borrow about 50% to 60% of its current value. This is because the lender wants to be sure if you default on the loan, he will be able to get his money back out of his investment. The tougher your situation is, the less the loan to value ratio is likely to be.

Just as your particular situation will play a large part in what your loan to value ratio is, the interest rate will also reflect the amount of risk that the lender feels he is taking on with your loan. The interest rates will usually fall in the higher than normal range. This will be somewhere from 11% to 18% depending on the risk and other factors of your loan. There is a place for hard money personal loans and at times they can be of great help.

Define Hard Money Easily

Looking to define hard money the easy way? This article will help you understand what hard money is really all about, understand who it’s for and when it is usually used. You can find all sorts of hard money definition online but below is a more comprehensive explanation for those who are confused. Read along to be able to define hard money yourself.

Hard money is the term used for the finances you receive from a hard money loan. On the other hand, a hard money financing is a loan based on the borrowers assets. Investors are usually the ones who avail of this type of loan. It is usually used to invest on a real estate property. Take for example if you are looking into a business venture such as buying and selling a house or buying a commercial property and having it leased by retailers, then getting a hard money type of loan is right for you.

Now that you are able to define hard money, you are probably wondering where to receive those funds? Who lends hard money and how easy or difficult can one avail of it? There are a lot of hard money lenders out there. You just have to get in the know. These lenders are usually discreet because of the amount of cash they handle and manage. Imagine these people have extra and readily available cash to invest on various business ventures. Just imagine how much money is involved. Thus, they usually work from the comforts of their homes. This is why you have to ask around and see if anyone knows one. Ask your neighbors or those in the real estate business to find out if there is one in your area. This is also why they are referred to as the private lenders. They are not like your conventional bank that everyone knows.

So why do you think is hard money preferred by those who avail it over getting a loan from a bank? Like what we are discussing above when we define hard money, it is perfect for those who are acquiring a real estate property because the primary collateral will be the real estate property. And since properties move quickly in the real estate business, specifically the ones for investment purposes, it’s best to get hard money because of the faster processing times. Lenders of this type of loan aren’t like banks that processes loans for at least 30 days. When you get an investor for let’s say a fixer upper home, you simply need to convince that lender and show the property. Once he or she agrees, you’ll easily receive the funds.