The Difference Between Hard Money & Personal Money

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The Difference Between Hard Money & Personal Money
Hard Money Vs Personal Money

When speaking of hard money and personal money people tend to get confused. The major confusion lies in the biggest similarity: both are asset based loans, based on the value of the property being purchased and not financial credentials of the borrower. The next biggest similarity is the disassociation from banks or nationwide lenders.

Hard money lenders are certified to loan money, while personal lenders do not require any type of licensing. Personal lenders include friends, family, professional referral, or business associates anyone can be a personal lender.

Hard money is much safer than a personal loan since there must be lending criteria involved in hard money loans. These loans have various phrases outlined such as: length, interest rate, and upfront factors. These factors are outlined and agreed upon before the money is issued and all hard money lenders are likely to use different phrases to attract borrowers who have specific needs.

The downside (but possible upside) of personal loans is there are less (if any) outlined phrases before the money is issued. The phrases are usually up to negotiation and can, in theory, change as time progresses. The phrases can be discussed to obtain more money, better interest rates, and sometimes simpler phrases in general. This can direct to personal money loans ending up as the cheaper option, but not always.

Hard money lenders usually utilize personal sources for their funding, necessitating a markup on the interest rates to make a profit while personal loans, in a feeling, are removing the third party and getting the money straight from the personal supply to the borrower.

One of the biggest bonuses to using hard money is the simplicity of access. Personal money can be harder to find due to absence of advertising while hard money lenders focus on that business specifically. Since personal lenders may only provide lending services on the aspect or when requested, it can be difficult to track down, meaning hard money loans will save borrowers time (and in a feeling, money) by needing less searching and less hrs spent negotiating.

If you’re seeking a personal money loan, they are out there and can be an alternative to hard money loans when seeking real estate deals, but always keep in mind that companies like My Rehab Lender are here to help you with your funding needs. Our rates are reasonable and our service is quick and easy so you can get on with your life quicker.