bad credit loans

Posted by & filed under Bad Credit Loans.

Have you ever heard of “hard money loans?” They are also known as private money loans. Do you imagine a guy in a dark trenchcoat and glasses with a briefcase full of hard, cold cash? You’re a creative thinker if so, but that is not the case. There have been bad lenders who have given these terms a bad name in the past. But there are regulations in place to keep in check bad credit loans and predatory “shark” lenders.

What is hard money lending? What do hard money loans do? According to Investopedia, a hard money loan “a short-term bridge loan” or a loan of “last resort.” These loans are generally used in real estate and real property transactions. They are based on the value of the subject property as collateral and not on the creditworthiness of the borrower. Banks do not make hard money loans, therefore, specialty financing companies and individuals are the sources.

Lenders of hard money care about the value of a property, not the borrower’s credit (as mentioned above). Borrowers with a foreclosure or a short sale on their record can obtain a hard money loan as long as they have enough equity in the collateral property. Bad credit loans are not the same thing as hard money loans due to these distinctions.

Borrowers with single-family homes, multi-family residential complexes or commercial or industrial properties can obtain money through a hard money loan. There are lenders who specialize in specific property types, such as residential properties, and therefore would not be helpful to you if you own commercial land. Keep in mind that hard money loan agents will not lend money on owner-occupied properties due to federal regulations.

You can use a hard money loan for fixer-uppers, fix and flip properties, straight land loans, construction loans, for buyers with bad credit or a history of bad credit loans, or when an investor needs to move on a property quickly.

Hard money lending is not a be-all, end-all loan and is not appropriate for all borrowers or transactions. If you have good credit, long continuous income history and do not have short sales or foreclosures on your credit history, traditional bank financing is most likely the best course of action. However, a hard money loan is good if you need a loan quickly or if financing through a bank is not a good option for you.