A hard money loan refer on the financing which is provided by a non-institutional lender. You could actually find a lot of hard money lenders who are offering fast funding through an attractive interest rate. As a borrower, you need to perform thorough checks when it comes to the reputation of the lender as well as the business, but if you do your research, you actually will find that hard money lenders could give you different advantages for funding real estate investment project.
Below are some benefits which it can actually 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. A hard money lender places their focus if the asset comes with good market value and borrower equity to at least 20%. Financing takes place only within just a week than the normal loans which takes a month or maybe 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. If you opt for a private lender, you can actually discuss with them and come to a mutually agreeable repayment plan which you think is really suitable for you.
Prepayment Penalties are Non
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 No Issue
With regards to big lending institutions, credit history actually has a big impact when you are going to get a loan or not. Through private lenders, there is less emphasis placed for 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 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.