If you have never heard of it, hard money loans are provided against your property. They are provided by hard money lenders and not by your usual financial institutions. You see that when you need money no one is willing to lend you, simply because they think that you would not be able to pay back. But in your gut you know that this one last toss that can turn the tide in your favor. What to do now? You can opt for hard money loan.
If Your Credit Rating Is Poor
What happens is that when you go to a bank to ask for a loan. Almost first thing they inquire about is your credit history or if you are in financial trouble. Come on people if one had good credit history or there was no need for money, why would anyone want a loan? So they will tell you, that how sorry they are at their inability to do any business with you. What to do now, your last chance is just going and you can do nothing. In this moment of desperation, you can turn to hard money lenders.
You see these hard money lenders are the people who are willing to take a risk when others just want to be cautious. So naturally they are going to charge higher than your normal financial institutions. Also since they are taking a greater risk, therefore they are also going to pay you les then your nominal value. It just means that they are just going to pay you somewhere in the range of 60% to 70% of the value of your property. This property of course is going to act as collateral. There are few things that you need to take in to account. For instance you are going to opt for hard money loans only if you are not going to get money anywhere else.
Things To Know Before Taking Out a Hard Money Loan
When you want to take a hard money loan, you should take some precautions. If you are desperate, it does not mean that you have to make poor decisions too. First thing you need to know is that there are always some unscrupulous elements. They will try to take advantage of anyone’s troubles and make some quick bucks. Some companies will ask you for a pre-assessment fee. After receiving the fee, they will refuse you the loan and keep the fee. So when someone asks you for fee upfront. Then it is time to be very careful.
One thing you can do to protect yourself is to hire a good real estate lawyer. To help, protect you from all the snares and pitfalls. Hard money loan is a desperation move. You should only opt for it if you really have no other alternate left. Hard money lenders are business men. Who do this for living if they are honest then it would not matter to them whether you fail or succeed. They will only be interested in their profit and recovering their investment.