When someone experiences financial difficulties and need to borrow money, especially large amounts of money, they can apply for a commercial hard money loan. If they have a poor credit rating already they may find that they have few options when it comes to getting needed funds. Many who are in financial distress seek out a loan that is large enough to pay off many smaller debts. These can be obtained from hard money equity lenders who must determine if the property in question has enough value to be worth the amount requested in a loan. This type of loan enables a borrower to have just one larger payment that most likely will result in paying out less in overall interest in the long run. A commercial hard money loan will give that borrower a chance to catch up on their bills.
Obtaining a loan based on the value of property is called a hard money mortgage and can prove beneficial to people who own property as an asset but do not wish to sell it. Often times a private money loan is merely a private lender who wishes to invest in real estate in exchange for the interest he will gain during the lifetime of the loan. They will be willing to lend based on what the property “loan to value” is at the time. As an example, if the property is valued at one hundred thousand dollars, the largest amount the borrower can expect to receive is about sixty five to seventy percent of that value, or sixty five thousand to seventy thousand dollars.
Finding parties interested in lending commercial hard money or fast hard money for those in need can be considered a last ditch effort when money is needed quickly and the real estates owner does not wish to entirely give up their property. They borrow based on the value of the real estate and risk losing it if they cannot repay the money borrowed in a set period of time.
Owning property can be an asset for some but often they consider themselves to be real estate poor due. When the values on real estate “crash” as they have several time in the past, commercial hard money lending can be a risky business for lenders. In the early nineteen eighties and again in the early nineteen nineties property was devalued considerably but eventually came back up. This made the “loan to value” rates lower overall to protect investors.