3 Reasons behind Hard Money Mortgage Loan Rates

Getting a hard money mortgage can help you through many financially tough times. However, if you plan on getting this type of loan, you need to go ahead and plan on paying higher interest rates as well. Here are a few reasons hard money mortgage loan rates are so high.

1. Credit History

One of the main reasons that these types of loans carry such high interest rates is because of the credit history of the majority of the clients. These types of loans are typically the last resort for many borrowers because they have been turned down by traditional lenders. In order to make up for the risks in lending to these types of people, hard money lenders have to charge more.

2. Lack of Competition

Hard money lenders are not nearly as easy to find as traditional lenders. These are individuals that wish to lend their own private funds. This means that it is not as easy to shop around for a hard money loan. As a result, they can charge whatever they want and still find customers.

3. Distressed Borrowers

Many people that turn to hard money mortgages are in distressed situations. If you are close to losing your home to foreclosure, you might agree to any interest rate that saves your home.

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