Hard money loans refers on the financing that is provided by the non-institutional lenders. There actually are many hard money lenders who actually offers fast funding through attractive interest rates. As borrowers, you will have to perform thorough checks with the reputation of the lender and the business, but when you do your research, you will find that hard money lenders are able to give you various advantages in funding your real estate investment project.
Below are some benefits which it can actually offer:
A benefit that could be obtained from hard money loans is due to the fact that investors can actually secure pre-approvals in just one or two days when they submitted the needed documents that the lender requested. The hard money lender have a focus whether the asset comes with good market value and borrower equity for at least 20%. Financing also takes place for just less than a week compared with the normal loans that could take a month or more.
Through private lenders, you are able to have more freedom on creating customized repayment plans. Through a big financial institution, you don’t have such freedom, but you need to accept the payment terms which the bank has set. If you opt for a private lender, you can actually discuss with them and come to a mutually agreeable repayment plan which you think is really suitable for you.
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. Most of the fix and flip lenders does not charge prepayment penalties, so when you ever come across extra cash and decides in paying off the loan before its due date, you will be confident do it without having to worry of being 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. With private lenders, there is actually less emphasis on weak credit history. This is simply for the reason that private lenders usually put their basis of loan approval on borrower equity, property value, etc. This would be as long as you can meet on the criterias, you have a good chance in getting the funds.
Another benefit which you could acquire from hard money lenders is that there are more properties which are renovated in the community and the property values rise and helps improve the quality of life of neighborhoods.