In our culture of mortgage scares, rising gas prices, and other monetary concerns, sometimes all you need is a willing ally in your last-ditch effort to regain financial footing. This is where the hard money lender steps in.
Ideally, in your day-to-day dealings, you will never pursue a hard money loan from a private lender. Then again, in an ideal world, you would never see any sort of lender at all! While every lender and their loans come with terms that may frighten some consumers, such as “interest rate” and “collateral,” it pays to examine the pros and cons of hard money.
Advantages:
A hard money lender will work with you, often bending over backwards in the process. Keep in mind that these are private investors that want to believe you can provide what other lenders would not have touched. These lenders understand that hard money is often a last resort, and will remain focused in their dialogue to make it work for all parties involved.
Commercial hard money lenders are a good idea if you are in the most appropriate situation to take advantage of quick money at a cost. Perhaps you need a quick-fix bridge loan, or your credit is spotty, or you have your hand in some undeveloped land that can serve as collateral toward more liquid funds you can actually put to use. Whatever the case may be, hard money can be a quick fix that reaches beyond the boundaries that more traditional institutions may be afraid to tread.
Lenders of so-called “hard money” are becoming more common and more accessible: Perform a search for “Las Vegas hard money lenders” and you will discover many results, many for the state of Nevada, specifically. There are even private lenders based online, at your convenience. If you are considering hard money, it has never been as widely available as it is right now.
Disadvantages:
The interest rates involved in hard money loans are often prohibitive. As with any loan, you should only approach it in a responsible, informed manner. While a hard money loan can offer the exact solution you need, it can also prove to sink you into a deeper hole.
Past practices have dictated that it is still formally recommended that you consult and work with a professional real estate attorney when working with any hard money loan. This will prevent property loss through questionable defaults, “late payment” schemes, or other calamitous proceedings.
Hard money is frowned upon, generally speaking. It will not prove to bolster your credit score, nor will it build esteem in financial circles of any sort. This type of lending still holds an obscure, dirty, forgotten-child reputation in institutional circles.