Pros of Obtaining Hard Money Loans
Hard money loans is a different way of obtaining money that is not common for people. Hard money lenders can lend you money for a time period of 10 years or more if you need a loan hurriedly and cannot get it through a bank or credit union due to low credit score or other causes. They don’t base the loan on your credit but your assets. Therefore another alternative are hard money lenders. Positives and negatives of hard money loans are as follows:
Quick procedure- To accomplish the procedure, the banks often take 60 days. One to two days is the typical time period for hard money lenders to lend you the money. If the local lender is an acquaintance, they might give you the money on the same day. This would work well if you desperately need the funds for emergency cases.
Not a lot of documents- There is often a waiting period of 1 month if you borrow through a bank or other institutions and they would often let you fill out a lot of documents. Hard money lenders will usually waive that. Each one has their own process that involves individual borrowers. Usually, borrowers will only need to fill up a few documents. Lenders will check your credit history at times and ask a few questions. Lenders are required by an act to make sure that borrowers will be able to pay, that the interest rates aren’t huge, and that pre-payments won’t be more than two. The factors that lenders use to analyze their conclusions are based on the property value and not on credit scores. Although you have not so good credit, you could have the possibility of getting a hard money loan.
Flexible circumstances- Banks may insist on regular payments. The lender will take it easy on you and will give you different options to pay the loan.
High interest rate- The hard money lenders will have an interest rate of triple the banks or even more. Lenders could be unpredictable sometimes in their interest amounts so it is crucial to look around. Lenders will know that they are your only option so it’s important to negotiate even if they offer a reasonable rate.
Hard money loans are beneficial when you are stuck in a bind and can’t get the funds anywhere else. They don’t have strict approval standards, are quick to obtain and involves less paperwork. The bad side involves a high interest rate. A hard money loan is only desirable if you need the funds badly and have no other alternatives.