Every real estate investor needs to start looking at hard money loans as a financial tool. The most significant advantages are their speed and flexibility. However, there are other significant benefits of acquiring a hard money loan from a hard money lender. We’re going to discuss those numerous benefits in this post.
1. Fast approval and funding
Applying for a hard money loan from most hard money lenders is a straightforward and simple process. In most cases, all that is required is the completion of a standard loan application.
Once the loan has been approved, funding can take anywhere between one and two weeks. Sometimes, professional and reputable hard money lenders can fund loans within days. This makes it super convenient for real estate investors who need to close deals quickly.
2. Fewer requirements
When applying for loans from regular financial institutions, borrowers face several set requirements, such as income history, which may limit any chances of acquiring the loan.
In particular, bank loans can be very cumbersome to process. With hard money personal loans, however, there are fewer requirements. When you have a high-value asset that has at least 20% of equity, you have higher chances of qualifying for a loan.
3. Flexible payment
Given the fact that hard money lenders are private lenders, borrowers have more freedom to create customized repayment plans. This kind of freedom is not offered in most major financial institutions. For instance, borrowers have to accept the repayment terms set by the bank. With private lenders, however, it is easier to discuss and negotiate the repayment plan and come up with a mutually agreeable contract.
4. Zero payment penalties
Most private money lenders do not charge penalties for their repayment. This means that if you get extra cash before the set payment date and decide to pay off your loan early, you can easily do so without worrying about a penalty.
5. Credit history is no big deal
According to research, about a third of Americans have bad credit, which makes it very hard for them to get loans from large lending institutions. Credit history can have a huge impact on whether a borrower gets a loan and how much they qualify for. With hard money lenders, however, loans are approved based on borrower equity and the value of their collateral.
6. A working partnership
For real estate experts to work with the hard money lender, it means having a working partnership. This is because the lender always wants the projects to run smoothly in order to get their money back. The last thing they want is missed payments or any unexpected issues with the properties.
This means that a reliable and competent hard money lender analyzes loan requests and gives an honest opinion about projects to minimize any problems. The lender may be of big help to the investor, as they may bring up advice and concerns about the project.
7. Hard money loans make a real estate offer stronger
Offers from real estate agents with hard money loans for financing seem a lot stronger than offers from bank loans. Private money loans tend to stand out because banks are unpredictable and it’s always possible for them to pull out their financing from buyers during escrow.
This always puts the deal in jeopardy or kills it altogether. A hard money lender, on the other hand, will not do such things and can be a more reliable source of financing.
Hard money lenders are the alternative to the risk-averse banks. Try them today!