Hard money lenders are just another type of mortgage broker—or are they? Well, yes and no. Here are a few ways that hard money lenders are actually very different from your run-of-the-mill mortgage broker — and what that means for real estate investors.
Private versus institutional creditors
Mortgage brokers typically work with a number of institutions, such as large banks and mortgage lenders, to arrange mortgages and make money on certain points and loan fees. You can also look for a hard money loan and lender in San Francisco.
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Coin lenders, on the other hand, work directly with private lenders, individually or as a pool. If the coin lender is working individually with the private lender, for each new loan application, the coin lender must contact each private lender until he has raised enough funds to fund the loan. The money is then kept in trust until the end.
Different types of real estate – capital investment versus owner work
While a typical mortgage broker can work with residential or commercial real estate, coin lenders simply prefer investment real estate – also known as Non-Owner-Owned Real Estate
Knowledge of predatory loan laws
Ownership (OO) ownership is subject to what is known as predatory lending laws – a set of laws designed to protect consumers, particularly the illiterate, minority, and poor, from unscrupulous and unfair lending practices.
Saving money with hard creditors
Now that we've covered some of the differences between a coin lender and a traditional mortgage broker, you can see some reasons why you might use a coin loan for an investment property that you want to turn over or pay off and resell.