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. 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.
Some of the benefits that can be obtained from it are as follows:
Approvals are Faster
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%. The financing actually takes place for only less than a week than normal loans which usually takes a month or probably more.
With the private lenders, you are able to have more freedom for creating customized repayment plans. By having a big financial institution, you will not have such freedom, but you will need to accept the payment terms that have been set by the bank. 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
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 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 with regards to getting 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 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.