In today’s highly materialistic world, loans have become an integral part of your lives. Sometimes, it is just not possible to live within your own financial means to fulfill your specific business goals and property aspirations. Moreover, in the case of real-estate loans, it is quite difficult to get loan approvals from the conventional sources such as a bank and other traditional financial institutions. There are numerous conditions applicable and restrictions; so, many of you are deprived of bank loans. What do you do in such situations? Obviously, you would turn to hard money lending. Right from the typical short-term loans to try your luck on a risky real estate project, advantages of hard money lending are absolutely clear. Here are some of the general benefits of opting for hard money loans.
A hard money loan seems to be a highly specialized financial tool which is frequently used mostly by hardcore real estate investors. Experienced real estate investors are very well aware of the merits and demerits of hard money loans but the inexperienced investors require to educate themselves so that they have a sound knowledge of hard money lending and can accordingly take the right decisions for their precise projects. However, before you think of borrowing from a hard money lender, you must explore the various advantages and even the disadvantages of hard money lending.
Super-Quick Approvals and Fast Funding:
One of the greatest hard money loan benefits is the incredible speed at which the loan approval, as well as, loan disbursement takes place. In several cases, the hard money loans are approved as fast as within just one day, in a matter of a few hours. A typical hard money lender considers your property, down payment amount or the equity, the exit strategy, and finds out if the borrower has adequate cash reserves for making the loan repayments every month. If the money lenders are happy with these criteria, your loan approval would be granted at the earliest possible.
People who have never used hard money loans previously would surely be amazed to see the fast operations and the speed at which the loan approval and loan processing is completed. Most hard money loans could be funded within just three to five days. You must necessarily compare that with a minimum of 30 plus days that a traditional bank would take to approve and fund your loan. Thanks to this speedy funding, several real estate investors have benefitted. You may get in touch with for fast and easy loan approvals.
Hard Money Loans Necessitate Just a Few Requirements:
Loan application approval depends on your eligibility. All lenders would be examining if you are eligible as per their own set standards. Banks and other conventional financial institutions actually decline numerous loan applications simply based on stringent criteria, and there is no hope for any leniency eve in the near future. In this context, you must understand that hard money loans are actually privatized and so there are relatively fewer requirements for obtaining a loan.
As already discussed, hard money lender necessitates fewer requirements particularly, in comparison to bank loans. Some of the basic hard money lending requirements are the borrower must have adequate equity, sufficient cash for making a monthly payment, ample experience, and a sensible and reasonable exit policy. You must appreciate that fewer requirements would be implying higher possibilities of loan approval.
Bank loan approvals also depend on a certain list of issues which are supposed to raise a red flag. Banks would not even consider the loan request in case of recent foreclosures, loan modifications, short sales, and even bankruptcies. Another most important factor is bad credit and a bank would always step back if your credit score is lower than the approved limit. Moreover, most banks steer clear of a borrower who seems to have 4 mortgages already even though the borrower has no other associated issues or a bad credit.
Moreover, banks desist from lending to individuals looking for home loans but are self-employed or cannot show the requisite 2 years of an employment history in his current job. Even if the borrower seems to be the perfect candidate for the home loan in all other aspects, some of these arbitrary requirements of the banks prevent them from funding the borrowers.
Provides Funding For Projects that Are Generally Rejected Elsewhere:
Hard money lenders generally offer several loans that are never financed by banks and other conventional lenders. For instance, any fix & flip loan. This sort of a project would be involving a real-estate investor buying a property using a short-term loan. The intention is to quickly do the required repairs, and updates, thereafter, sell off the property. In a majority of the cases, these real estate investors would be requiring just a 12-month loan. But this sort of a 12-month loan is not compatible with the conventional business model of a bank. In this context, you must know that the banks are too happy to approve only long-term loans and make small amounts of money in terms of interests over an extended period of time.
There may be several issues relating to a property that would be preventing the property from being eligible for a conventional bank loan. All these issues may be associated with plumbing, electrical, or foundation and so the bank may think that the property is not fit for habitation and so the project would not be funded. Banks seem to be totally risk-averse lenders and so they do not ever consider any loan scenario that seems to be outside their stringent lending purview. A hard money lender, on the other hand, is willing to lend money to a borrower for purchasing a property with various issues that prevent it from being eligible for a loan from a traditional financial institution or a bank.
Bad Credit History? No Issues for Hard Money Lenders:
One of the most critical factors that are considered while obtaining a loan is your credit history. Banks do not approve loans if the borrower has a poor credit score. Hard money lenders are extremely flexible on this count. A credit score is certainly taken into account but you would not be penalized or your loan request would not be declined for past mistakes. Money lenders are ready to consider your present proposal and they are not afraid of taking risks.
Conclusion: Hard Money Lending is the Way to Go:
While opting for a loan, usually banks have strict standards and they want you to abide by the set norms. Banks are not bothered about financing if any risks are involved. You must acknowledge that hard money lending seems to be the most transparent, convenient, and easiest way of obtaining loans when you require money urgently. It is high time you went the hard way!