The Benefits of Private Money Loans
Hard money loans are financing that’s provided by the non-institutional lenders. There are actually a lot of hard money lenders who actually offers fast funding with good interest rates.
The borrower should implement a thorough check on the lender’s reputation as well as the business and when you implement your research, you will be able to find that hard money lenders will be able to give you a great advantage on your quest in funding real estate investment projects.
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%. The financing could take place for just less a week compared to normal loans that could take about a month or more. If you are going to inquire about hard money lenders, one of the questions that you should ask is about how fast they can fund you.
Through the private lenders, you can then acquire more freedom when it comes to creating a customized repayment plan. But this freedom is not present with big financial institutions. Instead, you must accept the payment terms which 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
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. 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 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
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 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.