Whether you’re a real estate investor, property rehabilitator or builder, chances are at some point you’ll find yourself faced with the decision to get a loan for expenses. While borrowing from a bank would be easy, provided you have perfect credit history and solid employment history, many may find that they don’t meet the minimum requirements for the loan. This is where hard money lenders come in, and may be able to help you with all your property financing needs.
You may not have heard of hard money loans, and that’s okay. Since we don’t deal with owner-occupied or homeowner loans, it’s understandable that this might be the first time you’ve needed one. Hard money loans are essentially loans from a private investor or small group of private investors, and will go off of the property value itself, rather than your individual credit history. Here are the top three reasons you should consider going with a hard money loan over a traditional loan:
Getting a conventional bank loan can be quite difficult and time-consuming, as they are under strict regulations and require extensive paperwork before you’re ever approved, and sometimes the process can take up to a month, if not more. If you need to get a loan within a deal that is time-sensitive, such as a flip project where you need to acquire the property or a builder with a deadline, hard money lenders can help you close the deal within a week, or sometimes as little as 24 hours.
Hard money lenders tend to be more innovative with complex loan situations, and can often offer more flexible terms than conventional money lenders. Because they get to operate under their own loan criteria, and have the freedom to overlook many of the constraints that banks face, this enables them to base the approval and loan plan on the borrowers plan for the property.
As a borrower with a need for a financial loan, you may not just be limited to credit issues. When looking to approve or deny a loan, banks also often look for issues such as liens, property disputes, divorce, foreclosure or unemployment to base your approval on. With hard money lenders, they lend on the value of the property first, and the financial strength of the borrower second. Our interest rates are often higher due to this, but this ensures that almost anyone building, flipping, or investing in a property is able to quickly and easily get a loan from us to fit their needs.