Hard Money Vs Private Money - What Type of a Loan Works Best For You?

When trying to raise the initial funding for your investment, there are several things to consider. For example, would it be in your best interest to enlist the assistance of a hard money lender or would it be better to use the resources of a private money lender. There are pros and cons to both methods of financing, and after you have weighed both, selecting what works best for you should be much easier.

Hard money lenders include small companies and individual investors, and are a good source of quick cash. Although the money is readily available and easily accessible, you might find that it also comes with a pretty high interest rate. For this reason, it is a wise idea to consider a hard money option if you are planning to finance on a short term basis as it is an excellent short term financing tool.

If you are in a bind and need emergency money immediately, receiving a hard money loan sounds ideal. Even though there are usually high interest rates attached to such loans, you generally have the option of refinancing the property at a better interest rate. The criteria for being accept for this type of loan is based on the collateral, the property being financed, instead of the actual financial strength of the one borrowing the money. It is definitely the way to go if an investor has issues with his/her credit.
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