Hard money loans are the form of financing offered by non-institutional lenders.
Every lender is supposed to carry out a check on your credit score, among other factors. However, many times you may have the repayment ability but a poor borrowing history. That way, chances are that a traditional lender like a bank or credit union won’t give you the loan.
What then do you do? The option is hard money loans from a non-institutional lender. But one thing you must have in mind is that not every one of these lenders is a good one. Thus you’ve to perform a thorough check on each, so you don’t fall for cons.
Here are some benefits of hard money loans
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Fast Approval
The big question you’ve to ask here is, how quickly can they fund? Who doesn’t want to get money in time? When you have a property on offer, time is limited, and any delay could mean you miss out on a great deal. A significant benefit of a hard money loan is that you will secure approval in a day or two as long as you’ve submitted the required documents to the lender. Most of these lenders will focus on whether the asset you buy is of great value and a minimum borrower’s equity of 20%. Standard loans will take even a month, but you’ll get hard money loans in a week or less.
Have Flexible Payments
Private lenders allow you to create customized repayment plans. You don’t have such freedom with a big financial institution. Instead, you have the payment plan set by the bank. A private allows you to discuss and come up with a mutually agreeable repayment plan suitable for you.
Few Requirements
When applying for an investment loan through a traditional borrower like a credit union or bank, you’ve to meet a set of requirements like experience, income history, etc. Therefore, the approval process can be a cumbersome one. You can be sure hard money lenders won’t burden you with such requirements. As long as you have high-value assets with an equity stake of 20%, the chances are that you’ll qualify for a loan.
No Repayment Penalties
When you get a loan facility from a bank or big lender, you could be subjected to prepayment penalties when you pay the loan earlier than the agreed time. Most of the fix and flip lenders don’t have such penalties.
That means if you have the money and decide to pay off the loan before the due date, you don’t have to worry about being penalized for it.
Credit History Not a Parameter
With the major lending institutions, your credit history will play a significant role in whether you get a loan or not. If you satisfy their criteria, you stand a great chance of being funded. But with private lenders, there’s not much emphasis on the credit score. This is because the private lender is more concerned with the borrower’s equity and property value.
Hard money loans will come to your rescue when you’re in desperate need of financing. When looking for investment money loans Athens, GA, from a private lender, you have to check and ensure that they are a reputable lender. Don’t fall prey to the many cons in the market.
