Advantages of Private Money Lenders and Loans
Hard money loans are considered to be financing which is being provided by non-institutional lenders. There are in fact many hard money lenders that are offering fast funding with good interest rates.
The borrower should perform a thorough check with the reputation of the lender and the business and as you do your research, you will also find that hard money lenders will be able to provide a good advantage when it comes to funding real estate investment projects.
Much Faster Approvals
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. A hard money lender focuses whether the assets have good market value and the borrower equity would be 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.
Payments are Flexible
With a private lender, you could get more freedom when it comes to creating customized repayment plans. You cannot actually get such freedom through big financial institutions. You will instead have to accept the payment terms that were being set by the bank. But through private lenders, you will be able to talk with them and end with an agreeable repayment plan which you think is 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. With the hard money lenders, you will not be burdened about the 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
If you will get the loan from the established bank, you actually are subjected to prepayment penalties when you will 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 a private lender, there’s actually less emphasis that’s placed on your weak credit history. This would be because a private lender is going to be based with loan approval on the property value, borrower equity, etc. If you are able to meet this criteria, there’s a chance that you are going to get funded.