Hard money loans are financing tools used by a lot of real estate investors today. There are a lot of hard money lenders in the market today, and with the right choice, you can benefit a lot from a hard money loan. When choosing a hard money lender, ensure that you consider things such as the amount they are willing to lend you, the rate at which they want to lend you, and their credit terms. Choose a lender only if they meet your requirements because you have very many options today. Real estate investors use hard money loans because of their flexibility, and many other benefits. In this article, we will be looking at some other benefits of hard money loans.
Firstly, a hard money loan makes a real estate investor’s offer seem stronger than his or her competitors’. This is especially in cases where the property has offers from multiple investors, most of who have loans from conventional banks. This is because conventional banks have been known to pull funding from investors during escrows, which undermines most sales. Many sellers are not willing to risk this, and this is why they choose investors with hard money lenders over those with loans from conventional banks.
Secondly, hard money loans are popular because they are easy and fast to get. The application process for a hard money loan is straightforward. Most hard money lenders only require investors to fill out a standard loan application form. These loans are so easy to get that they can be approved in a matter of minutes. This is unlike loans from conventional banks which require one to fill out multiple loan application forms that take weeks to be approved. This is not convenient in the real estate industry because the property you have your eyes on could be snatched by another investor by the time you get your approval. Most hard money lenders fund their clients in a matter of a week if their loan is approved, making them the best choice with investors today.
Thirdly, hard money loans are popular because their approval is not dependent on one’s credit score or income history. This is a nice change of scene from conventional banks, which consider these factors when determining whether or not to approve a loan. The main focus of hard money lenders is the value of the property that the investor wishes to buy, and the down payment the investor has on the property. This is because the property will serve as collateral for the loan. Most hard money lenders see no need to focus on credit scores and income history because they deem the value of the property and an investor’s equity enough.
Finally, hard money loans are the number one choice for real estate investors today because they are provided even when one has recent issues on record. Some issues could prevent one from getting loans from conventional banks. Such issues include recent foreclosures, short-sales, and loan modifications. However, these issues are not of importance to hard money lenders because their loans are asset-based. The value of the property you wish to invest in and your equity in the property is what they mainly focus on when determining whether or not to approve a loan request.