Benefits of Hard Money Loans for Borrowers
80 and 90 percent of a borrower’s cost and are commonly used as a more flexible alternative to traditional bank loans. If you are seeking financing for a project, consider these benefits of hard money loans for borrowers.
Approved Quickly
While traditional bank loans can take months to get approved, hard money loans allow you to receive funding in just a few days or weeks. This quick funding is especially helpful for real estate professionals or other investors who are on a tight timeline.
Lenient Requirements
Part of the reason why you can receive approval for hard money loans so quickly is that their underwriting standards are far more lenient than bank lenders. Unlike bank loans which won’t consider lending to borrowers who have a foreclosure, short sale, or bankruptcy on their record, hard money lenders are more likely to overlook these red flags if the borrower has enough down payment or equity in the property.
Flexible Terms
Since private lenders offer hard money loans, there is more opportunity to negotiate the terms of the loan. As such, it is common for hard money lenders to tailor the repayment timeline to your schedule since they don’t have any restrictions due to pre-established term sheets.
Fund Undesirable Projects
If a project doesn’t qualify for a traditional bank loan, you may have better luck applying for a hard money loan. Since banks have extremely strict lending criteria, projects that involve working on a property that has any foundation, electrical, or plumbing issues are likely to receive a rejection. As such, it can be helpful to utilize a hard money loan to repair a property’s issues and then refinance using a traditional bank loan.
Act as Collateral
Hard money loans provide more options for borrowers to use as collateral. While the property involved in the project often serves as the loan’s collateral, lenders may also allow you to use personal assets to secure the loan. As you can see, there are many benefits to hard money loans for borrowers. If you’re looking for a quicker, flexible, and simpler alternative to traditional bank loans, a hard money loan may be the best option for you.