These are the loans obtained from non-institutional lenders. They are known for offering loans at low or attractive interest rates as compared to banks. Borrowers are advised to check on the reputation of hard money lenders before borrowing money. The following are the main benefits associated with these loans.
Flexible payment plans
With private lenders, borrowers have the freedom of creating customized repayment plans. This freedom cannot be obtained from other financial institutions. You will be forced to accept all the payments terms set by other financial institutions such as banks whenever you are dealing them. Private lenders will give you a repayment plan that is most suited for you. You can discuss with them and agree with them.
Faster Approvals
This is another great benefit that is associated with hard money loans. Borrowers can secure a pre-approval with two days. All that you are required to do is submitting all the required documents to the lender. Their financing takes a relatively short time as compared to the conventional loans. This has made these loans ideal for real estate investment projects. It is therefore important to ask the lender the time he or she will take to fund you once you submit the required documents.
Zero prepayment penalties
Sometimes borrowers might be penalized after obtaining money from established banks. Borrowers are fine for making payments before the maturation date. This can be avoided by borrowing money from flip lenders who don’t have prepayment penalties. By so doing, you can make your payments comfortably once you get money without being penalized.
Credit history
This is not a serious issue as far these loans are concerned. The credit history plays a significant role in determining if the borrower is qualified to get a loan. However, private lenders do not emphasize it. Instead, they are focussed more on the borrower’s equity and property value. Anyone can get funded as long as he or she meets the required criteria.
Fewer requirements
Borrowers are expected to meet certain requirements when they are borrowing money from banks and other financial institutions. Some of the hard-set requirements that they are expected to meet include experience, income history, and good credit rating. This is what makes the approval process cumbersome. Some of these burdens can be avoided by obtaining money from hard money lenders. With these lenders, you can easily get a loan provided you have a high-value asset. Many borrowers can qualify for such loans.