A hard money loan refer on the financing which is provided by a non-institutional lender. There are 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.
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. A hard money lender places their focus if the asset comes with good market value and borrower equity to at least 20%. The financing actually takes place for only less than a week than normal loans which usually takes a month or probably more.
Payments are Flexible
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. Through a private lender, you could discuss with them and end up with a mutually agreeable repayment plan which you think is suitable.
Zero on Prepayment Penalties
If you will acquire a loan from an established bank, you will be subjected towards prepayment penalties when paying off the loan before the maturation date. Most fix and flip lenders does not really charge prepayment penalties, so when you are able to come across extra cash and decides in paying off the loan before its due date, you surely will be confident in doing it without worrying getting penalized for it.
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 the private lenders, there’s less emphasis which is placed on a 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 is as long as you are able to meet their criteria, you will have a good chance of getting funded.
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.