Hard money loans are often misunderstood by potential borrowers. Commonly available through a private money lender, these lending arrangements are based on the equity in your collateral property and offer shorter-term solutions for cash flow needs. Read below to debunk many common myths about hard money loans.
Myth: Hard Money Loans Are Extremely Expensive
The interest rates for hard money lending arrangements are typically only slightly higher than those for more traditional loans. In all cases, the interest rate assessed for these loans is in line with the added risk that is associated with private money lending arrangements. Your private money lender will provide appropriate and practical solutions for your needs.
Myth: Hard Money Loans Are Only Useful in Foreclosure Situations
In fact, these lending arrangements are not usually available to homeowners and are reserved for businesses and corporate use. Some of these lending arrangements are also known as bridge loans because they are used to bridge the gap between the beginning of the project and the time at which it begins to generate revenues.
For example, a construction company might take out a bridge loan while awaiting longer-term financing options for a specific project. This can prevent delays in the construction process that could be costly in themselves.
Working with a private money lending company is a solid step toward acquiring the funding needed for a wide range of business enterprises.
Myth: Hard Money Loans Are Only for Bad Credit Borrowers
One of the biggest advantages of working with a private money lender is the speed of processing and disbursement of your funding. This will often allow you to take advantage of short-term opportunities in the real estate market and will give you a competitive edge that will often far outweigh the minimal added cost of hard money lending arrangements.
Myth: No Documentation Is Needed for Hard Money Loans
The qualification process for a hard money loan is somewhat different than that for traditional loans. You will, however, be required to provide information on the collateral you are putting up and documentation of your ability to repay the loan as agreed.
At Texas Funding, we have been providing hard money loans since 1982. We are a private money lender with a positive reputation in the financial industry. Our private money and collateral-secured loans are an ideal solution for land investors, commercial real estate investors and businesses throughout our area. If you need a quick response on your loan application and a reliable partner for your financial needs, call Texas Funding today at 1-800-833-0138. Our team will be happy to work with you to devise the lending arrangement just right for your needs.