The Benefits of Private Money Loans
Hard money loans are considered to be financing which is being provided by 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 needs to do a thorough check with the reputation of the lender and the business and as you implement your research, you will be able to find that hard money lenders are able to give you a great advantage when it comes to funding a real estate investment project.
Approvals are Faster
A benefit about hard money lenders is the fact that investors could in fact secure pre-approvals in just a maximum of two days when they have submitted the documents being 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. When you are inquiring about hard money lenders, the big question would be 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. You cannot acquire this kind of freedom 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.
Few Requirements Needed
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. It’s no secret that a bank approval can be stressful. But with hard money lenders, you will not be burdened with various requirements. This is as long as you have high-value assets and also have at least about 20% equity stake, there’s a good chance that you could qualify for the loan.
No Prepayment Penalties Present
When you acquire a loan from an established bank, you are subjected to prepayment penalties when you pay off the loan before the 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 Never a Problem
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.