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 actually a lot of hard money lenders who actually offers 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
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. The hard money lender places their focus whether their 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
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. 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 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. 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.
No Prepayment Penalties Present
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 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 is because a private lender will base a loan approval on property value, borrower equity, etc. Meeting this criteria will give you a good chance of getting funded.