The Benefits of Private Money Loans
Hard money loans are considered to be financing which is being provided by non-institutional lenders. There are actually a lot of hard money lenders who actually offers fast funding with good 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.
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.
Payments are Flexible
Through the private lenders, you can then acquire more freedom when it comes to creating a customized repayment plan. You cannot actually get such freedom through big financial institutions. But you will instead need to accept the payment terms 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.
When you are applying for a loan from normal financial institutions, you are expected to meet various hard-set requirements such as experience, income history and many more. It’s no secret that a bank approval can be stressful. Through hard money lenders, you will not be burdened on the different 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
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 fix and flip lenders doesn’t charge prepayment penalties, so when you have an extra cash and you decide to pay off the loan before the due date, you will surely be confident to do it without having to worry of being penalized.
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. When you are able to meet such criteria, you will get a chance of getting funded.