Every real estate investor should keep hard money loans in mind. Speed and flexibility are two of the biggest perks, but there are many other reasons why these loans are beneficial. Though it’s true that the interest rates for hard money loans are higher, these sources have allowed the real estate market to continue moving forward, despite an unpredictable economy.
If you are an investor that doesn’t fit into the conventional lender guidelines, or you are simply looking for a loan that is more flexible, here are three great reasons to consider a hard money loan.
Reason #1. You need fast loan approvals and funding.
Applying for a hard money loan is an uncomplicated process. Generally, you only need to fill out a standard loan application, and the cash can be offered on a conditional approval shortly after. It usually takes 1-2 weeks for the loan to be funded.
The traditional loan application that the banks have you fill out is far more complex. With pages of paperwork and long response times, it’s likely that another investor will snatch up the property before you’re able to.
Reason #2. You don’t have a picture perfect credit or income history.
Your credit and income are the two biggest predictors of being approved for a standard loan. If you don’t have impeccable credit or a strong income history, it’s possible for the banks to deny you on those grounds only.
Hard money loans are different. They mostly focus on the value of the property since this is the collateral for the loan, as well as the equity that you have in the property. As long as your lender is comfortable with the equity and valuation of the property, your income and creditworthiness shouldn’t matter.
Reason #3. You need a flexible lender.
Conventional banks are far from flexible. Not only do they make it very difficult to be approved for a loan, but also they tend to approve borrowers for significantly less than what they asked for. Hard money lenders, on the other hand, are much more flexible. It’s common for them to work through issues you may be faced with and come up with creative solutions.
Additionally, hard money lenders can offer you advice that makes the project more successful on your end. The lender wants to see you succeed just as much as you do, so they will give you their honest opinion as to what could go wrong.
If you think that a hard money loan can help you succeed at your real estate investment goals, call First Equity Funding. We work with investors in New York, New Jersey and Pennsylvania. Let us help you get the funding you need so you can continue doing what you love.
