When it comes to short-term loans, hard money lenders usually offer more flexible terms than conventional commercial real estate loans. It can fund real estate investment and development opportunities that you cannot get elsewhere.
This article will explain the importance of hard money loan terms that make them favorable, including:
Fast Funding
The biggest benefit of a hard money loan is getting approved for funding quickly. Hard money lenders do not rely on credit scores or other traditional methods for determining whether or not to approve the loan.
Instead, the lender will determine if you qualify by looking at your current equity in the property you want to purchase and your asset value.
Remarkably, hard money loan terms allow them to make fast decisions regarding whether or not they will grant you a loan. Such a design makes it easier to get cash quickly.
Flexible Repayment Terms
Unlike banks, which have strict policies on what they will lend and how they lend, hard money lenders are much more flexible. If you need a bridge loan to cover some costs while you wait for a larger investment to pay off, they will consider it.
Hard money lenders can structure a loan to meet your particular needs. You can often even negotiate with the lender how long you can take to repay the loan.
Less Paperwork
Sometimes called “asset-based” lending, hard money loans put less emphasis on your financial situation and background compared to conventional financing options.
In the nutshell, it means that there is less paperwork involved. The design makes it an attractive option if you do not have time to deal with a mountain of documentation.
Perfect for Investors
Hard money loans are perfect for real estate investors looking to quickly acquire properties that they can flip or rent out to refinance once they improve the property.
In many cases, an investor may need some additional capital to finish up a project before they can refinance with a traditional financial institution.
No Prepayment Penalties
Hard Money Loans are short-term loans (usually from 6 months to 3 years), and there are no prepayment penalties. If you want to pay off your loan early, there is no penalty.
Your company will not need to pay any additional fees or costs because you paid off your loan early. It helps you save money by paying interest only on the amount you borrow and not on the full amount of the loan.
High Approval Rates
One of the best things about hard money lending is how straightforward the qualifications are. Unlike traditional banks, hard money lenders do not base their decisions on traditional factors like credit scores or debt-to-income ratios. Instead, they focus on the asset’s value.
In Summary
Hard Money Loans are an excellent choice for certain projects that may not qualify for a regular loan. They are available at a considerably lower interest rate, making them viable.
The benefits of hard money loans are innumerable. If you want to know why hard money applications are becoming popular, please read this article to learn about these top benefits.
