The Benefits of Private Money Loans
Hard money loans are financing that’s provided by the non-institutional lenders. There are in fact many hard money lenders that are offering fast funding with good 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.
Approvals are Faster
One of the benefits with hard money loans is that investors could secure pre-approvals in only one or two days when they have submitted the documents which 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%. The financing could take place for just less a week compared to normal loans that could take about a month or more. If you will inquire about hard money lenders, a question that you should ask them is on how fast they could fund.
Payments are made Flexible
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. Through private lenders however, you will be able to talk with them and you could end up with an agreeable repayment plan which you think is really 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. But with hard money lenders, you will not be burdened with various 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.
Prepayment Penalties are None
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 fix and flip lenders actually don’t charge a prepayment penalty, so if you have an extra cash and then you decide to pay off the loan before its due date, you will definitely be confident doing it without worrying of any penalties.
Credit History is Not an Issue
Through a private lender, there’s actually less emphasis that’s placed on 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. Meeting this criteria will give you a good chance of getting funded.