Are There Risks to a Hard Money Loan?
Hard money loans are a useful tool to help borrowers who cannot qualify for a traditional loan for a variety of reasons, including poor credit, pending litigation, foreclosure actions, etc. Like all loans, they do come with a certain level of risk. Hard money lending is different than traditional lending, which is where most of the common pitfalls can be found. Before you dive into this process, here’s what you need to know.
Financing Is NEVER Guaranteed
Right up until you’ve got the pen in hand, ready to sign your documents, a hard money loan can still fall apart. These loans are generally backed by private investors, rather than banks, which means the funds may not be readily available at closing. If an investor changes their mind or something goes wrong at the last minute, the lender may not be able to perform. It is imperative that the borrower do their due diligence on any Lender they begin to work with. A Lender who has a history of failing to fund loans at closing will have a poor reputation within the industry.
To prevent any loans falling apart last-minute, H&O Capital works with a prospective client upfront communicating in detail …
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