A hard money loan often gives financiers the power to seize assets as collateral, sell them to collect on the debt, and charge interest rates up to 30%. However, as long as you can repay the money with interest within a set time frame (usually 24 months) no need to worry. Before taking out this type of loan, consider the below facts.
1. You Must Pay Close Attention to Detail
It would be best if you had a knowledgeable lender that can be able to guide you through the loan process. You can access the money quickly, but you can’t forget that you have a deadline for repaying the loan.
2. Comes with Other Benefits
Most people panic when they hear about hard money loans because they fear losing their assets. However, that is not the case. Hard money loans typically don’t require monthly payments. Instead, they are paid off over their term and include benefits such as granting the lender authority to seize assets.
3. You Have Quicker Access to Funds
Similar to payday loans; hard money loans are also short-term because the lender gives you cash immediately but charges you high interest. The difference between hard money and payday cash advances is that hard money can be disbursed to businesses and individuals to fund a project or purchase and is repaid over its term.
4. You Can Refinance If You Need To
A hard money loan allows you to refinance your existing debts and take on new, more manageable debt. Considering a hard money loan might be your best option if you have a lower credit score than what is required for a traditional mortgage or lack collateral to offer lenders in exchange for additional cash flow.
5. Good Interest Rates
The hard money industry has a few companies that are considered the best. Of course, there is space for error, but picking a bad lender can cost you a lot of money. Loans through hard money companies have better interest rates and are quick when applied.
6. Rigorous Underwriting Process
One benefit of hard money loans is a rigorous underwriting process and an alternative to traditional lenders. While it may not be the best option for everyone, it is a valuable tool for business owners and investors looking to grow their businesses.
7. No Collateral Required
Many people think they need a collateral loan to access more money than they could with a hard money loan. However, they may not be aware of the benefits of hard money loans, how quickly the lender can give them access to the money and how no collateral is needed.
In conclusion, hard money loans can be quite beneficial in certain situations. However, as with any loan, borrowing funds has a cost. For the better interest rates offered by hard money lenders and the lighter underwriting standards, hard money loans are usually slightly more costly than other types of loans and should be used wisely.