Hard money loans refer with the financing that is actually provided by the non-institutional lender. You could actually find a lot of hard money lenders who are offering fast funding through an attractive interest rate. 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.
Here are some of the benefits that it could offer:
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. 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.
Payments are Flexible
With the private lenders, you are able to have more freedom for 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. 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
If ever you get a loan from an established bank, you are going to be subjected to prepayment penalties if you will pay 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.
No Problem with Credit History
When it comes to big lending institutions, credit history have a huge impact if you are going to get a loan or not. With private lenders, there is actually less emphasis on weak credit history. This is due to the reason that private lenders put their basis of their loan approvals on property value, borrower equity, etc. This would be as long as you can meet on the criterias, you have a good chance in 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.