A hard money loan is a financial tool that is specialized and it one that is also used most often by a professional realtor, real estate agent, and also real estate investors. Veteran real estate investors know almost everything there is to know about hard money loans. If one is less experienced, they need to educate themselves on the whole subject so that they can easily make the decision for their specific project. Before you apply, a potential borrower has to know the main advantages and also the main disadvantages of a hard money loan.
In this list, you will learn about the advantages.
- Hard money loans will be approved and also funded very quickly. There won’t be an extraneous procedure that will bore and frustrate you. In most cases, the approval for the hard money loan will take just one day. The hard money lender will consider the property, the amount of down payment and also the equity that the borrower will have in the property. Real estate investors who have never used hard money will surely be amazed at how quickly these hard money loans are funded when compared to loans which are granted by banks. Some of the lenders in Los Angeles grant the loans in 3-5 days if needed. This, in comparison with the 30+ days it takes banks to fund a loan, hard money loans are highly sought after. This kind of quick funding has undoubtedly saved countless real estate investors.
- Hard money loans do not have too many requirements when compared with bank loans. They basically include the borrower having sufficient equity in their property and also enough cash on hand to make proper monthly payments. Fewer requirements directly means a higher likelihood of loan approval. Banks always have a lengthy list of requirements which a borrower must and should meet in order to qualify for the financing of the loan. Their requirements have surely seemed to get steeper every year.
- Hard money loans successfully provide funding for projects which have a way of being financed anywhere else. Lenders provide a lot of loans which conventional lenders like banks have no interest at all in financing. There can be numerous issues when it comes to a property which can prevent the property from qualifying for a traditional bank loan. The issues can be related to the foundation, plumbing, electrical, etc. and can cause the bank to consider the property as uninhabitable and also unable to be funded for. A hard money lender will be able to provide a borrower with a loan to purchase some property which has issues which are preventing it from qualifying for a conventional bank loan. The borrower can make necessary repairs and then refinance with a loan.