What is Hard Money Lending?

What is Hard Money Lending?

A common situation that is occurring within the real estate industry itself is hard money lending. This is when a loan is made for the purchase of real estate, where the property is in the areas of residential or commercial and it does not conform to the traditional bank lending standards. In many cases this kind of lending could involve real estate where the owner is behind on the mortgage payments, there is a bankruptcy or a foreclosure has taken place. These kinds loans are used where traditional bank loans are simply do not exist. This is why hard money lending has many distinct advantages that can benefit property owners such as:

You could avoid bankruptcy: There are many people who purchase real estate and they get in over their heads, where they simply can not afford the property. In many cases these same people have high amounts of debt which makes the prospect of bankruptcy seem like a realistic possibility. When you receive a hard money loan you can be able to use what is known as a deflated rate, this allows you to pay more of the principal back on property. As this continues on a regular basis you will be able to own the property quicker and be able to pay off your debt faster compared to other forms of lending. This will help improve your credit rating by showing that you are making your payments consistently and it will ultimately allow you to avoid bankruptcy.

You can be able to purchase real estate easier: For many people who are investing in commercial properties or even apartment buildings hard money lending is ideal. There are times when you are trying to purchase a piece of real estate where the lending standards are very tight and many investors are afraid to invest. One way to be able to overcome this dilemma is to receive a hard money loan. In general hard money lenders do not rely heavily on your credit report like many traditional lenders; instead they are concerned about if the investment makes sound financial sense. Where, the property is generating enough income to be economically viable during both good as well as bad times.

Clearly hard money lending is a great way to be able to receive the kind of financing that you are looking for. Above are just two of the distinct benefits that hard money lending has to offer. It is through understanding these different benefits that will help you determine if receiving a hard money loan is right for you.

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