Hard money loans are secured using equity, not creditworthiness. They typically come with much shorter terms and higher interest rates than normal loans. This article will cover Why people usually get a hard money loan? What types of borrowers routinely use hard money loans? What are the advantages of hard money loans?
Why do people ordinarily use hard money lenders?
Experts agree that the services of hard money lenders are a helpful short-term solution. They do point out that this type of finance can be costly if you don’t adhere to the terms.
Provide people who have a poor credit history access to their equity.
Hard money lenders make accessing your equity quick and easy compared to a traditional lender. Many of them are not concerned with credit checks as the loan is secured.
Loans are flexible.
Once you have property or assets to buy up as collateral, hard money lenders tend to be far more flexible than traditional lenders when it comes to the terms and conditions of the agreements.
Quick access to funds
Traditional loans and Hard money loans are worlds apart when comparing the speed they operate at, traditional loans taking weeks and even months, hard money lenders can offer approval in a few days.
Credit history is largely irrelevant.
In the vast majority of cases, hard money lenders do not require a strong credit history. A traditional lender is only focused on your lending history not on the need of the borrower. Hard money loans are always secured by property.
Who typically uses hard money loans?
Property flippers
A property flipper is someone who purchases a property, renovates it and rapidly disposes of it for a profit. Hard money loans are popular in this industry.
Borrowers who don’t qualify for traditional loans
There can be any number of reasons that a person does not qualify for a traditional loan. The reasons why are not strictly relevant. But if this type of person has equity tied up in property, they can take advantage of a hard money loan.
People facing foreclosure
This is less common but not unheard of. But some people choose to cash in on their homes instead of being foreclosed on.
