A hard money loan is a way you can secure cash to or a line of credit, by first putting up real property you own as a way to secure the funding. Instead of going through a bank to get this money, these kinds of loans are usually offered up by other private companies and lenders. By going through those providers, people who don’t have the best credit ratings can still get off the ground. There are some firms that would even be willing to offer up some hard money loans if you have taken significant damage to your credit score. On the flipside, you might need to have to pay back at a higher interest rate, or have a higher valued piece of personal property as the way to secure the loan.
The good news is that these loans can lead to you fixing your credit at the same time you are starting to dip your toe in the real estate investment field. Why this kind of funding is most often used is because these kinds of loans are larger and usually geared towards projects that span a few years. This isn’t a different version of a payday loan, despite the similarities, when it comes to distressed credit ratings.
Payday loans are usually used to take care of debt that you need to get rid of in a short period of time. Hard money loan lenders understand that they aren’t going to see the money they are doling out in a short period of time.
While hard money loans are still largely used for commercial reasons, there are some people who are looking at getting mortgage money. Of course, these people need to have other personal property they can put up in order to get this kind of loan. There are reasons why someone might need a mortgage loan, while they still have plenty of personal property to put up. The mortgage money can also go towards expanding or rebuilding part of the house that will take more than a few weeks. These kinds of loans are meant as a kind of safety net when there is a special project that needs extra attention.
Hard money loans are not meant to be the kind of money you secure when you are in a pinch. Make sure you have planned out what you are going to spend it on and when. Then you can apply quickly and easily and know that you have put all your ducks in a row.