There are many leading companies in the market today. Hard money lenders refer to the lending companies that specialize in offering loans which are backed up with collateral – that is typically a real estate property. These moneylenders provide loans to people for a very short period. In most cases, the interest rates that are charged by these moneylenders are much higher than the interest rates that would be charged by a bank for the same amount of loan. The reason for this is that these moneylenders are not governed by bank rules or any regulations.
When to use hard money lenders?
Unlike students who have access to hardship loans, a regular person will have to resort to other means of accessing financial support. Money market loans may also seem quite attractive but then this involves trading of securities in the market and an individual must assess security before being able to borrow loans for the money market.
Guarantor loans may also be quite attractive to an individual in financial distress. However the onus of paying back the amount falls on the counter rather than the person who borrow the money. For this reason not many people will be willing to ‘guarantee’ a loan that is borrowed by someone else. In some cases, people can apply for a loan modification hardship if is the individual already has a mortgage and has difficulty making payments on time.
When all these things seem to be difficult to attain, it may be acceptable to turn to hard money lenders. The trouble with borrowing loans from these lenders is that the rate of interests that are charged by these companies can be very high. Even if a person has bad credit history or no reliable source of income, this company is often provide loans to those individuals at high interest rates.
Problems faced with hard money lenders
There are many problems that faced by hard money lending companies as well as the people who borrow money from these companies. One of the problems faced by these companies is that when the customers default, they usually do not have a way of extracting money from them. For the customer on the other hand, the problem is being able to pay the high interest rates on these loans.
In some of the states, hard moneylenders are prevented from operating with their usual practices. There are regulatory authorities that monitor the activities of hard money lenders in states like Tennessee and New Jersey. However, when there is no regulatory authority watching over the interest of the customers, these lenders tend to exercise their own powers over the customers.
More often than not, individuals tend to default on hard money loans and can potentially lose their real estate properties in the process. Until and unless an individual has tried all the other means of obtaining financial help, it is wise not to go to the hard money lender. It would be a wise decision to seek professional advice on taking a mortgage loan from various banks before resorting to a hard money loan.
