Reasons behind Commercial Hard Money Loan Rates

If you are going through many financial difficulties, getting a commercial hard money loan will be an excellent idea. On the other hand, if you are arranging on borrowing this kind of mortgage, you will have to go forward and be ready to pay a higher interest rate.

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Here are several reasons why commercial hard money loans 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. Commercial hard money lenders have to charge extra to cover the risk of lending money to such people.

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 but to agree and take the commercial hard money loans with a high-interest rate.

No competition

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

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