Truths about Hard Money Loans

2. Many people have misconceptions about hard money loans due to the limited knowledge they have. Due to this lack of knowledge, most people do not understand what hard money loans actually are or why and when to use these. Did you know, hard money loans have been around for over 50 years and still a great alternative to traditional mortgage loans? Are you in the market for hard money loans in Alameda for real estate investment purposes? Then scroll down to learn more about hard money loans. What are Hard Money Loans? Also termed as “bridgeloans”, hard money loans are a type of mortgage loan which uses the underlying property as collateral for securing the loan. In todays market, hard money loans are typically referring to loans made outside of most bank and institutional guidelines. Borrowing money without going through the hassle and stringent rules of bank loans is what makes hard money loans a great alternative. Usually hard money loans are made by private lenders (individual or a private fund, trust or other group). In today's market, with a large segment of loan funding falling out, hard money loans are more relevant than they have been in a long time for securing funding.

3. What are the Pros and Cons? Pros: Hard money loans are made outside of the banks and institutions. Many of these loans are made to be sold on the secondary market. In times of market turmoil, however, these loans have no secondary market. This means that companies that rely on selling loans they make for their business model must stop making loans. Hard money loans, on the other hand, are made by individuals looking to hold the loan for yield. They are sold upfront, removing a lot of the secondary market fluctuations. Additionally, the loan terms are more flexible on hard money loans than that of the traditional loans. For investment and business purpose loans, the main underwriting guideline is the value of the property. If the property has the right equity, chances are a loan can be made. The best thing about hard money loans is that these are processed quickly. In these times of uncertainty, knowing that your funding is available quickly can help investors take advantage of opportunities. It is not out of the question for a hard money loan in Alameda to fund in a matter of days. Cons: The main drawback to hard money loans is with regards to the rate and cost. They are more flexible than bank loans, but that flexibility comes at a cost. Expect to pay higher rates as well as higher fees for hard money loans. Also, hard money loans are short-term loans unlike the traditional loans. Hard money loans typically will mature anywhere from 1 year to five years – although there are some 30 year products available. Be sure to choose the right lenders for hard money loans in Alameda to secure the funding you need today. Source from - http://blogs.rediff.com/acalending/2020/04/03/truths-about-hard-money-loans/

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