What is the difference between hard money loans and soft money loans? If you don’t know then check out the article below to find out which one is best for you. Read it all below.
In the world of finance, there are actually two terms related to lending: hard money lending and soft money lending. Soft money loans usually are those with flexible payment schedule plans and borrower-friendly conditions; whilst hard money loans are usually those with relatively strict terms and payment schedule plans, and everything is totally up to the lender.
Hard money lending is usually offered by both private and financial lenders. Private lenders are usually wealthy people who want to make some profit by lending their money to people they consider good payers/borrowers. Commercial lenders, on the other hand, are funding establishments which lend money as their business to those who wish to apply for a loan.
It is usually real estate investors who need these kinds of loan because in their case, it becomes a win-win situation. The loan providers will get their profit from the money they put out, and the borrower will likely bring in an instant profit from the property he or she decided to invest on, while being able to meet up with the payment schedule and terms of the lender.
So basically, although the terms as well as payment plan may be fairly tight and rigid, there are still many who go for this due to the fact this is a quick way to acquire finances. The moment your loan gets approved, you get the money right away.
Article by Jared T. Coleman