If you need a loan and have been turned down by traditional cash lenders, you can consider applying for a hard money loan. This type of loan is backed by investors and individuals who will let you borrow money based on collateral. California Hard Money Direct explains how this process works and why you would need this loan type.
What is Hard Money?
When you apply for a traditional loan, you have to prove that you can repay it. If your financial history is stable and positive, this will not be a problem. Even if you have excellent credit, the approval process can take a long time. With a hard money loan, the value of your collateral is more important than the money being borrowed. If you fail to repay the loan, the private money lenders will take the collateral and sell it. In most cases, a hard money loan is short term, from a few months to five years and has a higher interest rate than a standard loan.
Why Use Hard Money?
If you are unable to get funding the traditional way, you can consider this type of loan. Look around in your local hard money service areas to find the right deal. The benefits of hard money include the following:
• Get cash fast. A hard money loan will close faster because the lender is mostly concerned about the collateral you provide. Your financial history and credit rating are of lesser importance.
• Flexible terms. Unlike a bank with strict policies, you can build your own loan deal with a hard money lender. If your circumstances change, you may be able to change your repayment amount and schedule.
• Quick approval. If you have the collateral, such as investment property, a vehicle or a home, you will get your funds quickly.
When to Use Hard Money
A hard money loan is used by property investors for the purchase or refinance of homes and commercial buildings. Keep in mind that this loan type is expensive, and you should exhaust all other borrowing possibilities first before moving forward with your plans.
When you need this type of loan, you can ask local realtors and investors for recommendations in the hard money service areas close by. You can also go to California Hard Money Direct for all of your hard money loan needs.