5 Advantages of Financing with Hard Money Lenders
Hard money loans come in handy when your loan request has been rejected by the banks. These loans are actually provided by lenders that are not affiliated to any bank or financial institution. Most people regard them as a savior because they give their loans without asking too many questions like the banks. Their interests are even more favorable. In fact, the government has acknowledged their contribution towards helping small businesses secure funding by making laws that regulate their operations. This means that every borrower is protected against exploitation by these lenders. Below is a list of benefits of sourcing for funds from a hard money lender for your project.
- Fast Turnaround Time
Hard money lenders are your ultimate finance partner when you want to buy an asset within the shortest time possible. Unlike the banks that take ages to approve loan requests, hard money creditors approve loan applications very first. All they do is carry out due diligence on the asset that you want to invest in to confirm that it can fetch a good value in the property market. In fact, they insist on retaining the ownership document of the asset until you clear your debt. The car log book or title deed serves as security for the money they give you. Incase you don’t pay them back, they can sell the property to recover the money you owe them.
- Considerable Payment Plans
Large banks offer loans at their own fixed terms that are not negotiable. For instance, if you can’t take a loan with an interest of 10 percent and pay it in 2 years, they can’t do business with you and if you dance to their tune, your fate is sealed. Hard money lenders on the other hand have your best interests at heart. They don’t mind making a few adjustments to suit your abilities. If you can’t afford to pay the loan within the specified period, you can ask them to extend the grace period or give you a longer duration to clear the loan.
- Reduced Requirements
Private creditors have very few requirements that must be met before a loan is issued. As a matter of fact, California Hard Money Loans rarely rejects loan applications. However, the asset you want invest in must be worth at least 20 percent when compared with the amount that you want. If you were to apply for a normal loan from a financial institution, they would ask you to come with guarantors that can pay the debt incase you defaulted. Such a requirement can be a stumbling block because it’s hard to find someone who is ready to pledge for financial security. They might also reject your application if you are not on payroll.
- No Penalties
Those who borrow money from banks have to pay their monthly contribution on the agreed date. Late payment normally attracts a heavy fine. Such disciplinary measures can really ruin your finances. With independent lenders can pay on any date of the month without being penalized. This gives you peace of mind because you don’t have to worry about the penalties.
- Credit History not an Issue
It’s not easy to secure a loan from a bank when you have a low credit score. This is because they assume that you might refuse to pay them back their money. Hard money lenders are therefore the best option for people that have poor credit score. These private lenders don’t care about your credit repayment history. All they want is to keep the ownership document of the property you want to buy because they know you have nowhere to run to.