Private Hard Money Loans vs. Conventional Money Loans (Soft Money Loans): What’s the Difference?
As an investor or real estate developer, you’re constantly on the lookout for deals and opportunities that optimize your bottom line. When applying for private hard money loans funding or conventional loans, you may wonder:
Is there one loan type that is more favorable for my needs?
In this brief overview, Bridge Lending Group (“BLG”) discusses the main differences between hard money and Conventional Money Loan (Soft Money Loans). Our mission is to help you make a calculated and informed decision before deciding to work with us.
Private Hard Money Loans vs. Conventional Money Loan (Soft Money Loans)
Let’s begin by dispelling a couple myths about loan types:
- Private Hard Money Loans – Are not loans from a “loan shark”
- Conventional Money Loan (Soft Money Loans) – Aren’t as easy to get as today’s advertising would have you believe
The major difference in these loan products has everything to do with their applications and how they’re viewed in the lending world:
Main Difference # 1
- Hard Money Loans – Are secured by real estate, but may not carry the weight of requiring a specific purpose.
- Conventional Money Loan (Soft Money Loans) – Are granted for exclusive purposes only. When taken, borrowers can apply the funding received toward the specified purpose, only.
Main Difference # 2
- Hard Money Loans – Are generally asset-based. This means the private lender assesses the value of the property and /or the income from the property – not the value of a credit score or the applicant’s individual verified income.
- Conventional Money Loan (Soft Money Loans) – Rely heavily on the applicant’s credit score and verifiable income to determine the ability to pay back the loan.
The Main (and only) Similarity Between the Two
Both hard money loans and Conventional Money Loan (Soft Money Loans) are asset-backed.
Top Hard Money Loan Purposes
Hard money loan applications are predominantly used for the following purposes:
- House Flipping
- Real Estate Development
There’s One Key Exception
If you live in the property, or it’s listed as your primary residence, you won’t qualify for any of BLG’s hard money loans. However, you can use your primary residence as additional collateral.
Find a Loan Product That’s Right for You
The principals at BLG have over 60 years combined experience in the industry. We have been through nearly every conceivable phase of the housing markets – and we have had great success through each and every one!
We’re not just lenders – we can be your “partners in profit,” as well.
To learn more about how a Bridge Lending Group loan can help you, contact Patrick Cottrell at 844-742-9900 ext. 710.
Alternatively, you can fill out the application form online for Private Hard Money Loans and one of the BLG principals will get in touch. We serve clients throughout the United States and maintain offices in Jacksonville, Orlando / Central Florida and the New York Tri-State areas.