Loans of different types have made it easier for people to start a business of their own, invest in different developmental projects, buy a property, invest in fix and flips, or use the lent money for a relatively personal reason like buying a car or a house. The purpose of borrowing money determines whether the loan is of a personal or business kind.Let’s talk about some of the types of money lending bodies.
CONVENTIONAL MONEY LENDING INSTITUTIONS:
There are traditional money lending institutions, like banks, that lend money for both personal use and business investments. Banks and mortgage companies come with a set of prerequisites, whereby whoever fails to qualify would not be lent money.
PRIVATE MONEY LENDERS:
There are various private hard money lenders that lend money to people without any prerequisites, traditionally made by conventional money lending bodies, which makes them a good option for the unqualified borrowers, but are riskier for the parties on both sides. High risks call for high interest rates.
HARD MONEY LENDERS:
There are private companies in Tacoma WA that lend hard money to people who are interested in making real estate investments.
Hard money loans are lent to those who are in an urgent need of cash money, usually real estate investors, in the form of real estate as collateral or guarantee; the amount of money lent is dependent on the value of the collateral property. Collateral property can either be the borrower’s property or the one he wants to purchase. Hard money lenders are usually private companies or an affluent individual who makes money by charging interest on the money he lends.
WHY PEOPLE OPT FOR HARD MONEY LOANS:
- Quick Application Processing:
Conventional money lending institutions take longer, usually several weeks, to approve of an application. On the contrary, hard money loans are less time consuming and it takes less than a week, or probably a day, to approve a loan application and transfer the cash to the borrower.
- Short-term Loans:
Hard money loans are short-term loans that only last for 1 to 3 years, unlike traditional loans that can last up to 10 or more years. But, as the name indicates, hard money loans have relatively higher interest rates, and that too because these loans are riskier for the lender. That does not imply that hard money loans are not risky for the borrower, if not returned within the decided time frame can damage his reputation in the private money lending market, aside from the huge amounts of money he has to pay as interest.
- Safe and Secure:
Hard money loans were once considered fraudulent, but not anymore. People have gained trust in this system of money lending for the wide range of benefits it proffers. In actual fact, there are checks and balances on the deal made between a hard money lender and a borrower, reducing the chances of getting scammed for people on both sides.
- No Traditional Pre-Requisites:
People who are denied loans from a bank or a mortgage company refer to hard money lenders. Both parties are interested in making money out of the deal, which mutually benefits them. No credit history is checked, on contrary, a good credit history is required for qualifying for a bank loan.
WHAT IS HARD MONEY LOAN USED FOR?
Most people in real estate borrow hard money to make huge purchases or investments. Here are some situations in which people opt for hard money, despite the high interest rates hard money lenders charge.
- To Make A Huge Purchase:
Real estate investors who want money to make an immediate investment and cannot rely on traditional money loans, which are time consuming, opt for hard money loans.
- Fix and Flip:
Many people make money by buying a property, renovating it, and selling it. Hard money loan is the most suitable option for people in this business who use their own money for renovation and the borrowed money for buying the property.
- Construction Loans:
Top hard money lenders prove to be of great help to the Investors who need money to buy lands and construct residential or commercial buildings.
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