Hard money loans refer to financing provided by non-institutional lenders. There are a lot of hard money lenders who supply fast funding at attractive interest rates.
Because the borrower, you may must perform an intensive check on the lender’s repute and enterprise, however as you do your research you will discover that hard money lenders can provide an ideal advantage in your quest to fund your real estate investment project.
Benefits of Hard Money Loans
Sooner Approvals: Without a doubt, one of many main benefits of a hard money loan is the truth that investors can safe the pre-approval within one or two days, given they have submitted the handful of documents that the lender has requested. Hard money lenders primarily deal with whether or not the asset itself has good market worth and that borrower equity is at least 20%. Financing can take place in less than a week, as compared to regular loans which may take a month or even more. When inquiring about hard cash lenders, a key question to ask is how quickly they’ll fund.
Flexible Payments: With a private lender, you will have more freedom to create a personalized repayment plan. With a big monetary institution, you won’t have this freedom. Instead, you will have to simply accept the payment terms set by the bank. However, with a private lender, you can talk about and are available to a mutually agreeable repayment plan that you just think is suitable for you.
Fewer Necessities: When applying for a loan from a traditional financial institution, you will be expected to satisfy many hard-set necessities, like earnings history, experience, etc. It’s no secret that bank approvals can turn out to be a cumbersome process. It’s likely that you simply will not be burdened with so many necessities by a hard money lender. So long as you might have a high-value asset with no less than 20% equity stake in it, there are good chances that you simply will qualify for the loan.
Zero Prepayment Penalties: When you get hold of a loan from an established bank, you might be subjected to prepayment penalties if you happen to repay the loan previous to the maturation date. Most fix and flip lenders don’t charge prepayment penalties, so in the event you come across further money and resolve to pay off your loan earlier than the due date, you can confidently accomplish that without having to worry about being penalized for it.
Credit History Not a Big Problem: In the case of big lending institutions, your credit history can have a huge impact on whether you will get a loan or not. With private lenders, less emphasis is placed on a weak credit history. This is because of a private lender bases loan approval on property worth, borrower equity, etc. As long as you meet these criteria, you stand an excellent likelihood of getting funded.
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