Posts Tagged ‘money lending’

What Private Hard Money Lenders Do

Private hard money lenders are often individuals or small companies that provide special kinds of real estate loans for various asset classes. They offer borrowers with mortgage loan issues short-term loans or bridge loans, the amounts of which are dictated by the value of property rendered as collateral for the loan. The higher rates (as compared to banks and brokers) these lenders exact are ostensibly due to the risk involved in these transactions. These lenders have come into play by necessity – to provide loan services to borrowers who are unable to receive financial aid because of the current climate of the real estate mortgage industry.

Even with the higher interest rates entailed, the high-risk borrowers who have been turned away by ordinary lenders may prefer to work with private hardmoney lenders. The risks in these deals are mitigated by the equity securing the loan, typically ranging from ten percent to thirty percent. Aside from individual borrowers, high-risk companies also work with these lenders, as they, too, may have been unable to transact with larger lenders because of the increasingly stringent guidelines for underwriting the latter implement. Read more…