Advantages and Disadvantages of Hard Money Lenders

Hard money is nothing but a loan against property. Usually providing loans is the job of a bank because the terms and norms with the hard money lenders is just the same as with banks. Hard money depends upon the security of property. How does a hard money lender deal with his clientele? Hard money is different from commercial real estates loans in many ways. The amount of capital hard money, lenders offer is much lower than that of other commercial loan types.

But just as the coin has two sides, there are positive and negative aspects of everything. There are some drawbacks of hard money lending. The main shortcoming of hard money loan is that they are very expensive with interest rates ranging from 12 to 14 percent or even higher at times. So, hard money lenders are not always a healthy option to pick on. Because of such high interest rates a hard money lending is preferred only when the quality of the property is not worth it for which any other traditional lender will lend money. If the borrower has poor acclaim when big payment is required for a short span of time, he can loom to the hard money lenders.

The benefits of hard money lending are more than the disadvantages. As we all know that passing a loan is a much awaited process so it’s better to approach hard money lenders as he will lend us the loan in a time saving period. They can make decisions for the individuals in a faster way as compared to the paper work of the bank officers. Hard money loan is also used for nontraditional projects and developments.