Hard money loans and private money loans are similar in some aspects while differ in others. But when discussed among investors, the layman, more often than not, is left with more questions than answers. Here, we will discuss the similarities and the differences between hard money and Private money. Please call us at 888.334.6636 to know more about private money and hard money lenders in California, Arizona, Oregon & Minnesota.
The similarities are as follows:
- Both hard and private money are asset based loans, meaning they are dependent on the value of the real estate pledged as collateral.
- The real estate collateral backs the loans more than the financial credentials of the person borrowing.
- And last but not the least; they form the bulk of non-traditional lending sources.
The differences, therefore, lie in their organizational structures and the way they work. They are:
- Hard money lenders form organized businesses and are licensed or bonded in some way. Private money lenders, on the other hand, are just private. They can be anyone, a friend, family member, relative, a business associate, etc. Whoever they may be, they lend you the funds you need, sometimes accompanied by an agreement, and others solely based on trust.
- Hard money lenders have a criteria that a borrower must meet before they are deemed eligible for the loan. They have an interest rate, an appropriate duration, points and others. All these details are made known to the client before the loan is granted. These criteria are very important to people when they are selecting hard money lenders to suit their purposes. Lending limits, loan duration, interest are all open to discussion.
- Hard money is easier to find than private money. Private money lenders do not advertise their services. They are either part of your circle or you hear of them through-world-of-the-mouth. But it is all on chance. Hard money lenders, in contrast, often advertise their services. It makes for good business to market what they are offering to the masses. Therefore, they are easier to find and almost no negotiation skills to secure a loan.
Hopefully, the above distinctions help you decide on the best way to get what you want out of your loan. We, at Source Capital, offer the best terms for Hard Money loans in California, Minnesota and Arizona. Source Capital is a licensed top rated direct premier hard money lender in California, Arizona and Minnesota. For more info, please Contact us or call us today at 888.334.6636. We look forward to working with you.