Hard money loans are a type of loan that uses hard assets as collateral. These loans are often used to finance real estate, businesses, or other high-risk ventures. There are a variety of types of hard money loans available to borrowers. Here are some of the most common:
1. Private Money Loans: These loans are made by private investors, typically in the form of a loan against a property or a business. Rates for these loans can be higher than traditional bank loans, but they're often more flexible and risky, as the lender has less recourse if the borrower falls behind on payments. To know more about hard money loans, you can ceheck this source https://taylormadelendingllc.com/.
2. Bridge Loans: Bridge loans are short-term loans used to bridge a gap between two pieces of financing. They have lower interest rates and longer terms than other hard money loans, which means they're ideal for businesses or individuals who need funding quickly but don't want to take on too much risk.
3. Refinancing Loans: Refinancing hard money loans is a great way to save money while still getting the same high level of credit quality that you would receive from a traditional bank loan.
The main difference between a hard money loan and a traditional loan is that the lending institution will require an owner or partner to have a significant equity stake in the project being financed. This protects the lender if the project does not succeed and limits the risk of default on the loan.
Another key difference between hard money loans and traditional loans is that hard money lenders are typically more willing to offer higher interest rates than traditional lenders.