Hard money loans refer with the financing that is actually provided by the non-institutional lender. There actually are many hard money lenders who actually offers fast funding through attractive interest rates. Borrowers should consider performing through checks about the reputation of the lender and the business, but when you do your research, you will be able to find that hard money lenders can give you various advantages on funding real estate investment project.
Below are some benefits which it can actually offer:
Approvals are Faster
One benefit which could be obtained from hard money loans is on the fact that investors can secure pre-approvals in just one or two days when they submitted the needed documents that the lender requested. Hard money lenders focuses whether the asset have a good market value and borrower equity is for at least 20{f57fbbfae1d4a4defab46a202bf1ab2f442606cb90b30da267031800c3d24571}. Financing takes place only within just a week than the normal loans which takes a month or maybe more.
Flexible Payments
Through private lenders, you are able to have more freedom on creating customized repayment plans. By having a big financial institution, you will not have such freedom, but you will need to accept the payment terms that have been set by the bank. Through a private lender, you could discuss with them and end up with a mutually agreeable repayment plan which you think is suitable.
No Prepayment Penalties
When you acquire a loan coming from an established bank, you could be subjected to prepayment penalties when paying off the loan before its maturation date. Many of the fix and flip lenders does not really charge prepayment penalties, so if you will come across an extra cash and decides to pay off the loan before the due date, you are surely confident in doing it without worrying of getting penalized.
Credit History is not a Problem
With regards to big lending institutions, credit history actually has a big impact when you are going to get a loan or not. Through private lenders, there is less emphasis placed for weak credit history. This is actually because private lender base their loan approvals on the value of property, borrower equity and others more. This is as long as you could meet the criteria, you have a good chance of getting the funds.
Another good thing of getting loans from hard money lenders is that there are actually a lot more properties renovated in the community and property values rise and improves the neighborhoods quality of life.