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5 Secrets You Didn't Know About Hard Money Lending

Imagine you're a small business owner who's been turned down for a loan by your local bank. You need money to expand, but you don't have the time or resources to wait around for traditional financing. What do you do?  Enter hard money lending. Hard money lenders are private individuals or companies who specialize in lending money to businesses and individuals who don't meet the usual qualifications for a loan from a traditional lender. And while getting a hard money loan might be more difficult than getting a loan from a bank, it can also be much faster and less expensive. Here are five secrets you didn't know about hard money lending:

5 Secrets You Didn't Know About Hard Money Lending

1. Hard Money Lending Has Few Requirements

Hard money lending is a type of funding where private lenders provide capital for real estate investors. Hard money loans are typically short-term and have higher interest rates than traditional bank loans, but they are easier to qualify for.


One of the biggest advantages of hard money lending is that it has few requirements. Unlike bank loans, hard money lenders do not require a minimum credit score or income level. They also do not require tax returns or financial statements. This makes hard money lending an ideal option for investors with bad credit or who are self-employed.


Another advantage of hard money lending is that it is a fast and flexible way to finance a real estate investment. Hard money loans can be funded in as little as 48 hours, and they can be used for a variety of purposes, including purchasing a property, fixing and flipping a property, or refinancing an existing investment.


If you are looking for a fast and flexible way to finance your next real estate investment, hard money lending may be the right option.


2. Hard Money Lenders Assess Risk Based On Future Value

Hard money lending assesses risk based on future value by using a number of methods. The most common is the use of appraisals, which provide an estimate of the property's future worth. Appraisals are not always accurate, but they give hard money lenders a general idea of the risks involved in lending to a particular borrower.


They're looking at the future value of a property, not just its current value. That's because they know that most people who take out hard money loans do so with the intention of flipping the property and selling it for a profit.


That means that hard money lenders are less concerned with things like your credit score or your employment history. Instead, they'll focus on things like the location of the property and its potential resale value.


3. You Don't Need A Good Credit Score To Get A Hard Money Loan

Hard money lending is a great way to get funding for your real estate investment projects, even if you don't have great credit. That's because hard money lenders focus on the value of the property being used as collateral, rather than the borrower's credit score. So, if you have a piece of property that is worth a lot of money and can be used as collateral, you may be able to get a hard money loan, even with bad credit.


4. Hard Money Lenders Are Flexible

The biggest advantage of hard money lenders is their flexibility. Traditional banks are subject to numerous regulations, which can make them slow to respond to borrowers' needs. Hard money lenders are not subject to these same restrictions, so they can be much more flexible in their lending terms. For example, hard money lenders may be willing to work with borrowers who have less-than-perfect credit or who need funding for a project that traditional banks would not finance.


5. Hard Money Loans Are More Expensive

The biggest disadvantage of hard money loans is that they are more expensive than traditional bank loans. Hard money loans typically have higher interest rates and fees than traditional loans, so they can end up costing borrowers more in the long run. Additionally, hard money lenders often require borrowers to put down a larger down payment than what is required for a traditional loan.


Before taking out a hard money loan, be sure to compare the costs and terms of different lenders. You can use an online hard money calculator to estimate the costs of different loans. Be sure to factor in the interest rate, points, origination fee, and other fees associated with each loan before making a decision.


So there you have it – five secrets about hard money lending that you may not have known. If you’re in the market for a quick and easy loan, or if you want to learn more about how this process works, be sure to call us today. Our team of experts would be happy to answer any questions you have and help get you started on the path to securing the funding you need.

Do You Need a Hard Money Lender You Can Trust?

Persevere Lending (PL) is a California Corporation, specializing in the brokerage of privately funded mortgage transactions for real estate in Northern California, primarily in the greater Bay Area.  As you may know, Trust Deed investing, also known as “private” or “hard” money, is a niche alternative investment vehicle that offers an attractive return with the security of a Deed of Trust lien on the real estate collateral. We encourage you to call us at your earliest convenience to discuss private Trust Deed investing in more detail.  We can explain how you can enjoy tax-deferred interest income. We can also show you how even if a deal goes bad, you most likely will not lose a penny of your capital and you may actually make much more in the end. While nobody has a crystal ball, and we certainly will not pretend to know what will happen in the future, we do believe that there are trends in the market, both historical and current, that suggest that investing in real estate remains a secure and profitable investment option. Contact us today for your consultation!