What is a hard money lender or hard money lending companies? These are those individuals or firms that give a special kind of collateral based loan. Also known as short term capital credits, these loans grant funding or either cash based on value of the collateral property or entity. The security for this kind of loan can be anything from physical assets to property, cars, boats, houses, etc. You can find number of hard money lenders or money lending companies in Florida and other parts of America. These kind of lenders mainly focus on the borrower’s payback ability. Though it is named as loan, it is pretty different from formal loaning companies and institutions that need a FICA score, credit score, debt to income ratio, and other things for granting loan.
Hard money lenders have recently gained a lot of popularity. The reason being it is easier to get financial aid from them as compared to other financial institutes that have lengthy and complicated conditions and procedure for granting loans. However, one needs to be cautious and very careful in choosing a hard money lender. There are a lot of notorious people who may take unwanted advantage of your trust and take away your property.
Hard money lenders are known for dealing with different kind of financial aids. These may vary from commercial to residential grants depending on the client. Each lender has its own fees, terms, conditions their own schedule, and requirements to judge a client’s capability to payback. Each one specializes in a certain kind of loan which others might not be offering. These people have a higher ability to take risk unlike normal banks. Despite simple process and direct grants, the biggest problem that lies with these kinds of loans is that they offer very less security to the borrower. Also, the interest rate for these kinds of loans is much more higher than the usual ones. They also have a very low property to loan ratio which means the loan value would equal only seventy to eighty per cent of your property’s value. If you are the defaulters you will lose your asset completely. Any additional amount if you had placed as security would directly get placed in the lender’s account and you will lose from both ends. Therefore, financial experts suggest this kind of loan for only a few kind of people such as real estate investors, people with lower credit score, or small business owners.