Hard Money Lenders…A New Alternative for Borrowers

Hard money lenders are a new breed of lending entities. They are a far cry from the conventional banking and other financial institutions that offer loans to individuals and businessmen.  Hard money lenders are mostly a group of investors or a single individual whose business is to lend money to a prospective borrower with the condition that he (the borrower) covers the loan with a high valued property.

A conventional MONEY LENDER such as a bank would usually be interested in the borrower’s CREDIT score including his capacity to pay the loan. A conventional lender is also more interested in the credit history of the loan applicant. Also, the approval for a loan by a traditional lending institution is usually a very slow process.


How Hard Money Lenders Differ

BORROWING money from a hard money lender, on the other hand, is totally different. Instead of taking into consideration the credit score, history and capacity to pay by a loan applicant, their major concern in approving the loan is based solely on the value of the collateral that the borrower will offer to secure the loan. The money provided by hard money lenders is referred to as hard money. This is because the condition provided in the loan is very strict and hardly flexible.

Aside from this, the loan provided by hard money lenders will only be worth about 70% of the value of the property that is securing the loan. The main agenda of hard money lenders are not to be sure of whether the loan can be repaid or not but more on whether the value of the collateral left by the borrower would prove to be profitable for them.


The Advantages of Using Hard Money

There are mainly two major reasons why some borrower would prefer to borrow from hard money lenders. Since hard money lenders are not a financial institution and covered by strict corporate laws, they can release the required loan at a much faster time. The other reason is that as long as the borrower can secure the loan at the high-value property with the help of the moneylender review, negotiating for the loan can also be quite profitable for the loan applicant.