Loans can be acquired using the physical property that one owns. Financing acquired using collateral is called hard money lending. These loans are often issued by private investors and non-bank financial companies. These are relatively short-term financing loans granted for one to five years. The interest rates for hard money loans are cheaper than conventional home loans because they have a short life and higher risk.
Transactions involving real estate and property can acquire hard money loans. Most hard money loans use some type of mortgage collateral. They can also be backed by other sustainable assets. They are perfect for people who need immediate cash flow and need to get financing quickly. Traditional loans are not for everyone.
The hard money loan can be done by the borrower when he has a low credit score. Hard money lenders don’t care much about a borrower’s credit rating. They are more concerned with the value of the property used as collateral.
These loans are best used when a project is in urgent need of funding, as the loan funds are provided by hard money lenders in a matter of weeks compared to traditional lenders which take longer months to be acquired. .
Hard money loans are great for buying property or renovate it. These loans are short term with higher interest rates but this does not pose a problem for the borrower who can repay the loan in a short time.