INNOVATIVE IDEA FEATURE
SOFT MONEY: Is It the New Hard Money? By Michael Mikhail, Stratton Equities
"S innovative
oft Money" is a relatively
making it a deeply attractive option
This
new term in the private
to potential borrowers who find the
appealing
lending
concept, (but not the details), of a
borrowers, because they require
hard money loan appealing.
little underwriting, making them a
approach
industry, to
an
private
money lending. A soft money loan combines similar guideline benefits
Hard Money Loans
of a hard money loan but at lower
Hard money loans have become the
rates and costs.
prime loan product for direct private money lenders. Due to the nature of
type
of to
loan both
program lenders
is and
quick loan for the applicant to get approved and a quick return for the lender on their money. The high-risk nature of this type of loan as well as reservations from
While a soft money loan requires
an asset-based loan, utilizing this
more underwriting than a hard
mortgage program is based on the
money loan, it offers lower risks to
Loan to Value (LTV) of the investment
pursue this type of asset-based loan.
both the borrower and the lender,
property in the loan scenario.
Real Estate Investors are attracted to
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the 2008 housing market crash, may make some borrowers reluctant to
