Hard Money Lending Texas: Difference between Hard and Soft Money Loans

Difference between Hard and Soft Money Loans

Posted by Unknown | Labels: Hard Money San Antonio, Private money lenders, Private money Lenders Dallas, Private money lenders Texas, Private money loans Dallas, Private money loans Texas

I’ve often wondered what the differences are between hard and soft money loans. Don’t they both involve money being given on interest for a specific period of time? Then why the different terms and what do they mean?

Well, it was only after I entered the field of real estate and started dealing in properties that the difference slowly dawned on me. Now I have come to understand that soft money loans are nothing but the conventional loans offered by banks for different purposes.

But hard money loans are more complex. They are not given by banks but by private money lenders, companies or associations of people who are looking to invest their money.

Yet, you may wonder why anyone would opt to choose, a Texas private money lender rather than a conventional bank for their loan requirements. Well, this is because private money lenders are willing to lend money for purchasing and repairing distressed or foreclosure properties and even to people with a less than stellar credit history. Such scenarios would never get a loan approval in any bank! And this is why hard money loans are also known as private money loans, bridge loans or even rehab loans.

But you have to keep in mind that private money lenders in Texas will charge higher rates of interest than banks as the risk involved is higher as well!