There is the common term “hard money” which most people are familiar with and then there is “soft” money, which may not seem quite as familiar. These two share a few similarities, but there are also significant differences. Let’s take a brief look at the two and how they may affect you as a borrower.
A hard money loan is generally used to renovate and improve a property or as a bridge loan. It is secured using the property equity. The terms tend to be short, from months to a few years. Compared to a traditional loan, interest rates are often higher due to investors focusing largely on the property equity instead of the borrower’s credit history.
Soft money loans share a similarity with hard money loans in that property equity is used as collateral. However, soft money loans do take a closer look at the borrower’s credit and financial scenario compared to a hard money loan. This means the loan typically carries a lower interest rate but the repayment period is longer. Soft money loans may also take longer to process as the lender has to examine the borrower’s financial and credit history carefully.
A hard money loan may prove useful in improving a poor credit rating. If the loan is successfully repaid, the borrower may be able to report it to the credit bureaus which could help in boosting the credit score.
This update is by hard money lending Miami company Monroe Funding Corporation, a direct equity lender serving clients throughout Central and South Florida. We specialize in first mortgages on non-owner occupied residential and commercial property investments as well as real estate loan options. Our fast and flexible loan programs get you to the closing table quickly and professionally. For more information on hard money lenders Miami or hard money loans Miami, please call 954-816-0388 or fill out our application.