Hard Money Loans is referring to non-institutional lenders that provide financing to borrowers. There are a lot of money lenders nowadays, such as Fortune Credit, that offers fast funding and enticing interest rates.
As a borrower, you will want to make a detailed assessment of the lender’s reputation and business, but as you investigate, you will find that hard money lenders can provide a wonderful advantage in financing for your real estate investment. Below is the list of advantages of hard money loans.
One of the advantages of hard money lending is, of course, the fact that you can get pre-approval from investors within days. Lenders focus on the fact that the asset itself has a market value and that the borrower’s equity is at least 20%. Loans can be made in less than a week, in comparison to other money lenders takes up to a month or so. When it comes to inquiring about hard money loans, the main question should be how fast lenders can fund money.
Private lenders offer you the freedom to make a customized plan for repayment. You will not have this kind of freedom with a huge financial institution. You will have to accept the terms of payment that’s been issued by the bank. With private lenders, however, you can talk with the lender and work out a repayment plan that you think is right for you.
No Prepayment Penalty
If you have received a loan from a bank, then there’s a chance that you’ll be subjected to prepayment penalties if you didn’t repay the loan based on the due date.
Most hard money lenders don’t charge penalties, so if you already have the money and decide for early repayment, you can confidently do so without worrying about the penalty.
When you apply for a loan from a normal financial institution, you are expected to meet some very strict requirements, including income history, experience, etc. We all know that bank approvals are a dreadful process for some. But with hard money lenders, you can be assured that a lot of requirements and qualifications will not burden you. As long as you have a 20% equity stake of value asset, you’ll have a high chance for loan approval.
Non-Major Credit History
Credit History has a big impact in terms of your loan approval in some big lending institutions. Not on hard money lenders, though. They don’t usually emphasize weak credit history. This is because private lenders accepting loans based on the value of the property, the borrower’s equity, etc. As long as these criteria are met, you have a very good chance of being financed.