Advantages of Private Money Lenders and Loans
Hard money loans are financing that’s provided by the non-institutional lenders. You could actually find a lot of hard money lenders that are offering fast funding and comes with attractive interest rates.
The borrower should implement a thorough check on the lender’s reputation as well as the business and when you implement your research, you will be able to find that hard money lenders will be able to give you a great advantage on your quest in funding real estate investment projects.
Much Faster Approvals
One of the benefit about hard money lenders is the fact that investors will be able to secure a pre-approval for just two days after submitting the documents that were requested by the lender. Hard money lenders actually focus if the assets comes with good market value and that the borrower equity is about 20%. Financing takes place for just less a week compared to normal loans that may take about a month or maybe more. If you will inquire about hard money lenders, a question that you should ask them is on how fast they could fund.
Through the private lenders, you can then acquire more freedom when it comes to creating a customized repayment plan. But this freedom is not present with big financial institutions. You will instead have to accept the payment terms that were being set by the bank. However, with private lenders, you could talk with them and then end up with an agreeable repayment plan that you find suitable for you.
If you are going to apply for a loan from a normal financial institutions, you will be expected to provide hard-set requirements such as your income history and experience and a whole others more. Bank approvals can sometimes be stressful. Through hard money lenders, you will not be burdened on the different requirements. This would be as long as you have high-value assets that has at least 20% equity stake, there are good chances that you will be able to qualify with the loan.
No Prepayment Penalties Present
If you acquire the loan from an established bank, you will be subjected to prepayment penalties if you are going to pay off the loan before its maturation date. Most of the fix and flip lenders will not charge prepayment penalties, so if you ever have extra cash and decides to pay off the loan before its due date, you will be confident doing it without worrying about being penalized for it.
Credit History is Not an Issue
Through private lenders, there’s less emphasis placed with your weak credit history. This in fact is because a private lender will be based with the loan approvals on the borrower equity, property value, etc. If you are able to meet this criteria, there’s a chance that you are going to get funded.