Reasons behind Commercial Hard Money Loan Rates

Here are several reasons as to why commercial hard money loan have high-interest rates

Credit score

Many commercial real estate owners have a credit score that is below 650. This means that it is poor and that they can get and don’t qualify for traditional lending. Commercial hard money loans are usually their last resort. To cover for the risk of lending money to such people, commercial hard money lenders have to charge extra.

Troubled borrowers

Many commercial hard money loan borrowers are usually in a distressed situation. For instance, if they are close to losing their home due to foreclosure. In such a case, the borrower has no option that to agree and take the commercial hard money loans with a high-interest rate.

No competition

Commercial hard money lenders are people who are willing to offer their private funds. Therefore, it is not easy to locate and find them. They can, therefore, charge the interest rates that they wish and still manage to get borrowers.