Ignore These Myths About Hard Money Loans

One of the biggest myths that are spread about hard money lenders is that hard money loans are giving right before a building is foreclosed on. The truth is that they don’t want foreclose on any property. Naturally, they want the loan to be paid back. Many lenders have their eye on the future. The best case scenario is that the loan will be paid back and the lender will be able to lend to that same company in the future when they make further investments. There is no incentive to foreclose on a property.

The Last Resort

Another myth that gets perpetuated about hard money loans is that they are the loans given as a last resort. For some reason, many people think that these loans are for those that need the money desperately. This just isn’t the case. Most of the people who look into this kind of lending are not living from paycheck to paycheck. If they miss out on the loan, they aren’t going to be broke or lose their business. In fact, most of them will have just missed out on a great opportunity. Don’t mistake a hard money loan as the last resort.

Loose Underwriting

There are many business owners that are turned away from hard money loans because they hear that they aren’t underwritten as tightly as conventional loans. It’s true that they aren’t underwritten the same. There are differences. However, this should not be confused with tightness. When it comes to a hard money lending situation, your lender is going to want to pay close attention to every detail. Keep in mind that these loans are asset based. These lenders are going to care more about collateral than conventional loans. This type of lender is also has more of a stake and higher capital invested in every loan. This means that they aren’t going to want anything to be underwritten loosely.

As with many different kinds of financing, hard money loans are often seen as intimidating. After all, the name doesn’t sound very inviting. It’s important to look past the myths, however, and to do a little extra research on the subject. There are a lot of myths that are out there about a variety of different financing options. The truth is, if you buy into the myths too much, you are going to miss out on opportunities that may be best for your business. When looking into loans, ignore these three myths.


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