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Hard Money Loan & Soft Money loan

If we talk about loan, there are two types of money available in the market. The types are; “Soft Money” and “Hard Money.” The whole market of loan provider and borrower is based on these two types.

Soft Money- Soft money more often comes from organizational moneylenders like banks, trust corporations or insurance companies, etc. They provide a very flexible payment terms and may extend the refund time for a long ways off. The guidelines and rules to borrow money from them are more strict and stiff. They mostly have more freedom with the terms of a mortgage or loan and are easier to qualify. The prime lending rate for these institutions is generally established by the Federal Reserve.

Typical soft money loans take 30 days or more. Sometimes it takes too long. Mostly it is time-consuming, needs too many documentations and verifications. Soft money lending institutions are concerned first and primarily with the probability and ability of the borrower to repay the loan money.

Hard Money- This is different from soft loans. The terms & conditions for this type of money are very specific and very strict. However, this type of loan has an interest rate much higher than other loans because most of that money comes from individuals. Therefore, hard money loans are also known as private money loans.

A loan of hard money is a type of asset-based loan where the borrower uses the value of its real estate to secure a loan. The private loan lenders provide 60-70 percent of the amount as security against the value of their real estate. Although they are higher in interest rates still hard money loan is very beneficial sometimes. Homeowners obtain financial assistance they need, but rarely requires any income or credit evaluation. This is required by hard money lender just to confirm if the borrower is able to return the money or not. So if someone wants to avoid foreclosure or bankruptcy then hard money loan is usually the best option.

Bailyn Carter is the content writer for California based Hard Money Lender. PB Financial Group Corp. provides equity based lending and loans for real estate property and sub prime money borrowers who do not meet the stringent requirements of conventional underwriting guidelines.

http://www.pbfinancialgrp.com/

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