Hard money loan is a term that describes the financing offered by non-institutional money lenders. Many people go for this type of loan as it can be obtained very fast and at competitive interest rates.
If you are thinking about getting a hard money loan, you first need to check out the overall reputation of the lender and see whether they are a licensed money lender. If you have found one then you can start the process by applying for such a loan that can be very beneficial for you.
The following are some of the many advantages and benefits that come with hard money loans.
Major Benefits and Advantages of Hard Money Loans
1. Fewer and simpler requirements
When you seek loan from a traditional financial institution like the bank, there are many requirements and conditions that should be met. You need to provide complete income history, credit rating, experience and so on. That can make the process very lengthy and you may end up disappointed. However, with other lenders you have much bigger chances to get the loan more quickly and with far less requirements that you need to meet.
In order to see which lenders offer the simplest requirements and other details, it is recommended you go through the SmartLoan’s Guide to Comparing Legal Moneylenders in order to make the best decision.
2. Quicker approvals
This is one of the biggest advantages associated with hard money loans offered by lenders. You can get pre-approved in a day if you submit the necessary documents.
The lenders of hard money usually focus on whether your equity is good and whether the asset has a good value. Financing can happen within a week in comparison to standard loans that may take over a month to happen.
3. Your credit history is not that important
Banks and other standard lending institutions always check credit history which has great influence whether someone can get the loan or not. However, private lenders do not put that big emphasis on this. They do not care much about credit history because their approval largely depends on your equity, property value and things like that. If you meet those criteria, you are almost guaranteed to get the loan.
4. More flexible payments
Private money lenders give you bigger flexibility when it comes to repaying the loan. Bigger financial organizations and institutions are stricter and not that flexible. You must accept their repayment plan no matter what. However, private lenders give you the liberty to discuss in detail and together come up with a good repayment plan that will be best for you to follow.
5. No penalties for prepayment
Banks usually charge prepayment penalties if you pay off the debt before the final maturation date. Private money lenders do not charge such penalties, so if you happen to have some extra money and you want to pay off your loan long before the maturation date, you can easily do that without any worries about penalties.