Three Biggest Benefits of Hard Money Loans

Funding your business or investment can be difficult with current loan requirements, especially if your need for financing is time-sensitive. Hard money loans may be the option you are looking for to accommodate your demand. Hard money loans, or private money loans, are not funded by banks or credit unions and are instead financed by private companies or individuals. They are offered in exchange for property or collateral and can offer a few advantages. Here are the top three benefits of hard money:

Less qualifying requirements than traditional loans

Private lenders aren’t much concerned with a borrower’s credit score or other paperwork. Private companies and individuals are more focused on the value of the collateral or property a borrower is offering and their equity in that property. This leads to a far less number of forms and requirements. The amount lenders are willing to loan is dependent on the value of the property. This is determined by the loan-to-value (LTV) ratio. That ratio tends to be 65 to 75 percent of the value of the property. Lenders will accept residential, commercial or industrial property as collateral. The more property the more money! 

Flexibility in structure and accommodation

Private lenders are typically more accommodating to loan structures than a bank. They may be willing to alter a loan structure to benefit both parties. If you are unable to pay off your loan in the time allotted, private lenders can assist you with those changes. Bank and credit union loans have strict structures and don’t waiver often. These aspects make hard money loans appealing for real estate investors. Investors can acquire money quickly and hassle-free to buy an available property before a competitor seizes the opportunity. If investors become interested in multiple properties, private money is an option to fund both purchases.

The quickness of loan approval 

The traditional bank loan seems to take forever, even if they decide to accept it. A loan from a bank or credit union can take more than a month to become funded. If you need money quickly, this isn’t going to work. Hard money loans can be processed within a couple days and funded within a week. Hard money fits into a short-term financing frame. The length of these loans can last months or up to five years depending on certain factors.

If you need quick, hassle-free funding, check out local private lenders online or attend a real estate investor meeting – always a lender there.