Private Money Lenders: The Ultimate Guide to Private Money Loans

For those that don’t want to borrow money through a traditional lender, they can use a hard money loan instead. Hard money loans are great when traditional lenders will not extend approval. Hard money loans are always there to help people that are having trouble obtaining the money they need through bigger banks. Collateral needs to be used when borrowing money from a hard money loan. Raleigh hard money loans may be a good fit for those that live in or near the area.

Even though hard money may be an expensive option for borrowing money, they can be closed out a lot quicker than a traditional loan would since they mainly reflect on collateral used. Lenders will not need to spend too much time going through a person’s application to verify income, etc. Flexibility is another pro to taking out a hard money loan. Every loan is considered separately rather than using an underwriter to look over the details of the individual’s application. People are also able to re-figure their repayment schedules if they wish without having to worry about the policies of traditional lenders.

For those that may be using their investment property as collateral for a hard money loan, the lender will look at what the property is worth to determine how much money to lend the customer. Lenders tend to look at the value of a property more than anything else when deciding. Negative credit history such as foreclosures, etc. will not affect the lenders’ decision. There are lenders that will not even run an applicant’s credit at all. They will, however, need to know about any personal finances an applicant may have.

For those looking for a short-term loan, a hard money loan may be their best benefit. A good example of a people that could receive help from a hard money loan is fix and flip investors. They do not live at their properties for a lifetime. Instead, they simply live just enough time to increase the value of the property and get rid of it by selling it. Once the sell the home they will also pay the loan back. Some people use hard money loans to be able to move into a new home and live there for a long time. This is a bad idea because those property owners will end up having to refinance to get better loan terms.

Assets are what secures hard money loans in the event a customer was not to pay the loan back. The lender would be able to take ownership of that asset. This allows everyone to stay secure. This is an expensive option and usually is only used as a last resort. Interest rates double on hard money loans but way easier to obtain. FHA loans are another good choice and can be used as an alternative to hard money loans. They allow customers to borrow from them if they don’t have the greatest credit, and if they cannot get approved for other loans due to their home needing some serious repairs.

Finding and getting connected with investors is the best way to obtain hard money loans. A Raleigh hard money loan may be a good option for those that live in that area. If one does not live in that area, they can find out who in their area lends loans based on collateral only. People may want to consider looking into real estate agents that are local as well as investor groups as sources. One should research and contact local companies to discuss what one’s needs are.