Understanding Loans

Advantages of Private Money Lenders and Loans

Hard money loans are considered to be financing which is being provided by non-institutional lenders. You could actually find a lot of hard money lenders that are offering fast funding and comes with attractive 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.

Different Benefits

Approvals are Faster

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. Hard money lenders actually focus if the 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. When you are inquiring about hard money lenders, the big question would be on how fast they could fund.

Payments are Flexible

Through private lenders, you will be able to get more freedom in creating a customized repayment plan. You cannot acquire this kind of freedom with big financial institutions. Instead, you must accept the payment terms which were 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.

Few Requirements Necessary

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. Bank approvals can sometimes 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 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

Through private lenders, there’s less emphasis placed with 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. Meeting this criteria will give you a good chance of getting funded.

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