Advantages of Private Money Lenders and Loans
A hard money loan is a financing being provided by a non-institutional lender. You could actually find a lot of hard money lenders that are offering fast funding and comes with attractive 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
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. The hard money lender places their focus whether their 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
With a private lender, you could get more freedom when it comes to creating customized repayment plans. But this freedom is not present with big financial institutions. But you will instead need to accept the payment terms 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.
Few Requirements Necessary
When you plan on applying for a loan from normal financial institutions, you will be expected to give the necessary requirements like your income history and experience and others more. The bank approvals sometimes 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.
Prepayment Penalties are None
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 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 a Problem
With private lenders, less emphasis are 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. When you are able to meet such criteria, you will get a chance of getting funded.