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[vc_row][vc_column][vc_column_text]Many people get confused between the terms conventional loan and a private money lending. Before proceeding further, let’s have a look at what exact does it mean. Private money lending is an individual or a group that lends money for real estate investment based on their private terms and conditions.

Private Hard Money LendingLike banks or finance companies, a lender or a borrower do not have to follow the standard guidelines for the loan procedure. It is also a kind of short-term loan that helps real estate investors to invest in real estate market to get rid of the stressful loan process and the high interest rates of the banks.

Owning land or building is not a good idea as it may take years to get the real return on your investment. But being a private money lender, you can lend money to the real estate investors and get an immediate return of high percentage immediately. Due to this, it is considered as the best way to get the maximum out of your hard earned money.

It depends on the direct lending determined by the value of the core collateral. If the agreement includes traditional loan-to-value (LTV) ratios, private money lending provides high security of the protective equity if borrower ever fails to pay.

LendMe has 75% LTV loans that but that are based on the real market value, which may be above the purchase price. LTV loans means that if you want to buy a $100,000 property, then 75% loan-to-value would be $75,000.

Is LendMe Similar to What Traditional Banks Do?

No, LendMe is much simpler and unique than traditional banks. But, a key difference that makes it more preferable than a conventional bank loan. Usually, banks ensure you to pay 1% interest per year on the money taken from you. But, on other side, it lends that money to borrowers at higher rates and keeps that money in its pocket.

At LendMe, it is completely different. There is no middleman as LendMe allows investors direct access to us.

Like traditional banks, we too believe in undergoing the well-organized and well-underwritten loans. We also have certain guidelines. But, instead of paying only 1% interest rate, we give 100% of the actual interest payment. We only deduct the small amount of management and/or servicing fee.

Reasons of Taking Help of Private Money Loan

Conventional commercial bank mortgage has fast closing date as compared to taking finance with a private money lender. In first case, a borrower has to close the loan payment in a specified time to avoid losing the contract deposit. It does not happen in private money loan as a borrower can take as much time as necessary for arranging the finance.

Approval for conventional institutional loans of the mixed use property may face certain issues. Also, a borrower with bad credit score, self-employed status etc. does not fit for conventional institutional loans.

Due to tighter lending standards, borrowers are more inclined towards private money loans to manage their finance. If you want to be a successful private money lender, all you need is to have the guidance of some experienced person that helps you to avoid the pitfalls and minimize the risk.

 

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