Hard-Money Lenders: Who are They?

Hard money loans are essentially loans that are offered by private lenders instead of banks and other financial entities. The people and organizations that offer these loans are referred to as hard-money lenders. Hard-money loans are typically offered to borrowers who do not qualify for traditional mortgages and financing through banks and financial institutions. They may also be employed by people or businesses that are looking to close quickly or are unable to provide sufficient income tax information. They are generally more willing to take on risks, but typically charge higher interest rates than traditional mortgages.

Some of the advantages of taking a hard money loan include the ability to negotiate the interest rate and other terms and conditions more easily than with a financial institution. You also save money on title insurance premiums and legal fees normally charged by traditional lenders. In addition, the closing time is generally shorter because the borrower does not have to wait for mortgage approvals.

The sources of commercial hard-money loans are usually private individuals, mortgage companies, federal banks and SBA lenders. Each individual lender has its own benefits and downfalls, so you may want to ensure you research as many different lenders as possible before making your final decision. Investing website, reiclub.com, provides a listing of several dozen hard-money lenders.