Banks and other financial institutions are highly regulated. Also, they are bound to stringent underwriting procedures that slow their activities. It makes it difficult for borrowers to get funding when they want it. But hard money lenders provide money for all activities as long as there is a collateral. They fund industrial, commercial, and other activities as long there is a collateral. Hard money lenders are flexible and offer equity-based solutions to borrowers. This article looks at why you should go for a hard money loan.
1. It is fast to secure a loan
Hard money loans are short term facilities that should be repaid between 1-5 years. The loans are processed quickly because they are based on the collateral presented. The lenders do not focus so much on credit rating. So, they do not spend a lot of time going through loan application forms. Also, they don’t waste time reviewing your bank statements and income. If you are an old client with a good relationship with the lenders, the process moves even faster. It allows you to close deals in the shortest time possible.
2. The loan is flexible
Agreements by banks and other financial institutions are rigid and not negotiable. But hard money lenders do not have a standardized underwriting process. So their contracts are flexible since each deal is determined based on its merits. You can agree on the repayment schedules, and even negotiate the amount to be paid. Hard money lenders are individuals with no strict policies to follow.
3. The amount you receive depends on the value of the collateral
Hard money lenders are only concerned about the collateral the borrower has. They can lend as much or as less depending on the worth of the property. Also, you can borrow against the different property you have. Negative credit rating and foreclosures are not considered when determining the amount you get. A few lenders will want information on your finances but the majority of them will not. They will focus on the value of your collateral. Lenders are only interested in the loan to value ratio. Anything between 50% and 70% is right for them.
4. Ideal for short notice investments
Fix-and-flip investors will find hard money loans desirable. They can be used to raise money to take advantage of emerging business deals. For instance, you can secure the loan quickly and use the proceeds to buy a property. You will repay the loan upon selling the property. This is critical for people in the real property business. It allows them to access the funds to use to purchase property easily.
We have looked at why you should opt for hard money lenders. Even though, it is essential to note that they charge a high-interest rate compared to banks. But the fact that it takes a shorter time to have the funds ready makes hard money lenders a good option. Also, you do not have to worry so much about your credit rating. If you already own collateral, you will get any amount depending on the value of your collateral. Visit https://maggiocapital.com/ for more details.