Since it is hard to survive these days in a tough economy, the probability for real estate investor and business owners to turn to non-traditional lenders is very common so that they can be assisted in giving their operation security and in helping them with their property purchases. An excellent option for businessmen is the alternative loan also known as the non-traditional loan since it is made available to them anytime with having to go through all the hassle that financial institutions may require and they can also give consideration with their interests which will depend if the loan is secured or unsecured. Be that as it may, business owners are still unable to see the distinction between these private money lenders and hard money lenders.
What Characteristics do Private Money have that Hard Money do not have?
Although both of these loans are able to aid in financing the business proprietors with their financial needs, they also have to set a time for their method of payment. Even if that is the case, there are still important factors that will be able to determine the difference of these two loans. The financial product that will be of utmost help to you can only be selected if you will be able to distinguish the difference between these two loans.
Basic Things You Need to Know about Hard Money Lending
Hard money loans are available for you by businesses who are adept at alternative lending. Hard money loans are financed by private sources but the lenders are still managed and their area of expertise revolve around real estate investors, business owners and private borrowers. Hard money lenders as well as private money lenders base their lending decisions on how the borrower is able to secure the money that they have borrowed by providing a certain percentage to the lender instead of having to depend on their credit scores.
Aside from that, loan terms and a set of approval criteria is still available for these hard money lenders to follow. Hard money lenders include borrowers who are not able to finance themselves, however they are still not allowed to do extensive negotiations on the mode of payment. So that their borrowers can be provided with fair terms, lenders rely on the standard formulas of the industry when it comes to interest rates and repayment plans.
Who are Private Money Lenders?
Based on the name of the loan, private money loans are loans provided by private lenders. Most if not all of these private money lenders dislike having to advertise that they are lending some money since they do not operate in the same ways as other businesses. Probably all of these private money lenders are not controlled by any financial company which is why they do not have to follow the rules and regulations of the industry regarding the terms and loan rates.
The approval criteria for loans does not have to be followed as well by these private money lenders. Since this private money lenders are not obliged to follow the set of criteria in the lending industry, borrowers will have a difficulty in accessing their private money funds.
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