A hard money loan is a form of loan that is covered with real property. Hard money loans are often considered as “last resort” or as short-term loans.

They are mainly used for real estate transactions, while in the majority of cases, the lenders are companies or individuals, not banks. If you have any further questions after this text, please contact California Hard Money Direct experts in this field.

How Hard Money Loan Works

Hard money loans are based on the estate, not the borrower’s credit rating. While traditional lenders, such as banks, do not provide hard money loans, lenders, in this case, are generally private individuals or companies, that in most cases, see a positive opportunity in such a risky venture. Hard money loans are a good solution for those people who flip property, renovate them, and resell. What makes a hard money loan cost higher is the incentive on which the borrower commits to repay the money in a short time. Most hard money loans are from one to two years.

Pros Of A Hard Money Loan

One of the biggest advantages of a hard money loan is the extremely fast approval process, unlike traditional lenders like banks. Private investors and companies that offer this type of lending like California Hard Money Direct have the ability to make decisions much faster because they don’t have to check the credit history of clients like banks. Investors are not interested in repayment like banks, because there is a possibility to resell the property. Another advantage of hard money loans is that there is no huge amount of paperwork, like with traditional lenders. Here each case is treated individually and decisions are made quickly, while some banks need several weeks to go through the paperwork.

Cons Of A Hard Money Loan

Because the only secure for hard money loan is your property, in case that you don’t repay the money, hard money loans may have a lower LTV (loan-to-value) ratios compared to the traditional form of loans. Interest rates may also be higher.

A hard money loan is ideal for anyone who is going through a difficult period or is currently in need of a loan to overcome a particular crisis. Suddenly, a difficult period can hit us today for that we are not financially well prepared, and in this case, hard money loans are the only rational solution.