Pitbull Mortgage - Commercial Hard Money
Subprime vs. Hard Money Lending
Subprime lenders and hard money lenders are often confused. Contrary to
popular belief, they do not refer to the same types of financiers. Both traditionally
serve as lenders for people who do not qualify for traditional loans through mortgage
companies, credit unions, and banks. However, hard money lenders deal with much more
extreme situations.
A subprime lender is a resource for those who have a poor credit history, lack sufficient
funds for a down payment, or are unable to prove their income. Because these borrowers do
not meet industry standards, they are seen as a high risk, and thus interest rates are
higher than with a traditional lender.
Subprime mortgage interest rates highly differ. They are usually dependent on the borrower's
circumstances. The other fees associated with the loan, such as penalties or fees for
procurement, are much higher than usual. Subprime lending can be extremely lucrative. Due
to the increasing number of individuals with poor credit, there is an increasing demand for
this type of lending.
Hard money lenders generally lend to those that subprime lenders will not. For instance, a
hard money lender might consider a person who is facing foreclosure. Hard money lenders are
considered last resorts. They do not base the loans on the borrower's credit history but
rather the homeowner's equity in the property. The loans have extremely strict terms and
are meant to be short-term.
Hard money lenders generally lend to those that subprime lenders will not. For instance, a
hard money lender might consider a person who is facing foreclosure. Hard money lenders are
considered last resorts. They do not base the loans on the borrower's credit history but
rather the homeowner's equity in the property. The loans have extremely strict terms and are
meant to be short-term.
If you would like more information on hard money lending, call Pitbull Mortgage School
today by dialing 858-736-7788.
