Hard money lenders provide a number of benefits that surpass a traditional bank. With hard money loans, the terms and conditions are customized to suit the Borrower and Lender. This includes anything from the length of the loan to interest rates charged.
Generally hard lending equates to a short term loan with higher than bank rates in both points and interest rate. Commercial hard money may be the exception as terms may be extended, given the complexity of the purchase.
With Los Angeles hard money, the concern is generally not the personal finances of the Borrower but with the lender’s position on the property – often the case in large metropolitan areas. This hard money lending position ensures first payment.
For the Borrower, hard money lenders offer short terms, high points and high interest rates. However, this hard money lending may save individuals from foreclosure or allow for improvements until long term financing becomes available.
Often hard money lenders are the only alternative. A retail strip mall, for example, may be slated for demolition. No traditional bank would fund such a project leaving hard money loans as the solution. These hard money loans could be used for renovations, which could lure tenants and prevent foreclosure.
Obviously, there are benefits to the hard money lending groups, as well. The benefits for both the residential and commercial hard money lenders are centered on the increased interest rates charged and the short-term risk.
Hard money lenders win on the fact that they have the opportunity to quickly reallocate their resources to another project. With commercial real estate the terms may be longer but so it the pay out.
As a Borrower, turning to hard money lending is a decision based upon a number of situations. Hard money loans may be perfect for your current borrowing dynamic as they do not take nearly as long as the traditional banks who take upwards of 30 days. Hard money lenders can have the funding to you in a week. When facing foreclosure, time is of the essence.
Further, the documentation you have at your disposal can push you toward hard money loans. Often times, incomes are understated for tax purposes, disqualifying individuals from the highly regulated banks. Since hard money lenders make personal decisions that may not be an issue. For example, Los Angeles hard money firms will bring hard money lenders together to get funding to those who do not “quality” due to their income-shaving techniques.
Finally, hard money loans can be used for a wide variety of purposes. There is no limit for its use as long as it is mutually agreed. Regardless of whether you are seeking residential relief or commercial hard money for a personal investment, you can find the right borrowing situation – guaranteed.
The hard money lenders benefit from the high rate of return and short repayment period, explaining why they would be willing to take the risk.