Whether you’ve experienced it yourself or heard about the negative experience from an acquaintance; if there’s one word that can get anybody on their nerves that’s “loan”.
Money loans are simple on principle, you go to a financial institution and request some money that you need right now with the guarantee that you’ll pay it back., However there’s a large gap between theory and practice, and as such traditional bank loans are long and trying processes that most people try to avoid.
Between the paperwork and all the requirements, it can feel like getting a loan is downright impossible, however, bank loans aren’t the only option available out there. That’s why today we want to take a look at the world of hard money lending and explain how you can benefit from it.
What is hard money lending?
The first thing we need to understand about hard money loans is that the general principles and regulations remain the same. A hard money loan is still an arrangement where you receive money from another party with the legal obligation to return it in a fixed period. Likewise, hard money loans are also regulated and completely legal, they just tend to be offered by different institutions.
So what’s the key difference between a traditional loan and a hard money loan? In short, the real difference is the way the loan is secured. If you go to a bank for a traditional loan, what secures the loan is your credit history. Banks take a close look at your economy and gauge if you can responsibly pay the loan in the given time. If your credit history supports it the loan is approved, if not then it’s rejected.
Hard money loans, on the other hand, are secured with real property, You offer property as collateral, that way if you aren’t able to pay the loan the institution will still be able to profit.
The main difference between both loans is ultimately the way they are secured, and offering real property means that the loaner isn’t at risk of losing money from the loan. Bank loans are complex because they are fully reliant on a long history of transactions and income to guarantee that a client can truly pay back the money they’ve been lent. Hard money loans on the other hand circumvent this by offering a property as a safety net, meaning that the loaner is less concerned with checking every single last detail of your economy.
Hard money loans are in general much easier and faster to approve than traditional loans, and they can prove to be a lifesaver when you need them the most. So if you are looking for Los Angeles hard money lenders just make sure to check all their certifications and keep in mind what we told you today, that way you’ll know you’ll be able to make a good deal in record time.