Not all lenders offer hard money loans because this type of funding is a little more hard core than a traditional loan product. Hard money loans tend to involve direct collateral of property, potentially stricter repayment guidelines, and possibly a slightly heightened interest rate. While this form of loan can definitely be convenient, it is wise to only accept a hard money loan in the right type of situation so you do not get yourself in a financial bind. Here's a look at some common situations when seeking a hard money loan would be a good idea.
You need to stave off foreclosure of your property.
If you have discovered that your home is getting ready to be foreclosed on because of default of the payments and your credit history has been affected, you will have trouble getting a traditional loan. In these situations, if you have substantial equity on your property or if you have another form of physical property to put up as collateral, a hard money loan can be a good idea. This form of loan will give you fast cash to catch up on your payments. Just be sure that you will be financially capable of taking care of repayment as required by the lender.
You need financing for your struggling business.
If you own a business and are facing a financial hardship, traditional loans may not always be accessible, but hard money loans can be. However, before accepting a hard money loan to help your struggling business, make sure the money you borrow will be enough to help you achieve new profit margins or fix whatever may be struggling in your business process. In a lot of cases, business owners take out a hard money loan to reinvest in a struggling business in the form of new inventory or equipment that is an almost sure bet to help them make more money and repay the loan.
You are in need of money to pay fines, bonds, or legal fees to keep you out of jail.
In certain situations where there are legal problems involved, a hard money loan may be one of the only options you have to keep you out of prison. These loans are an excellent loan product for these situations because you can get your money quickly most of the time. As long as you are positive you will be able to repay the loan according to the loan terms, hard money loans are a safe route to take.