The Biggest Advantages of Using Hard Money Loans

With investment comes risk, a risk many traditional lenders are slow or unwilling to take. When it comes to finding the money needed for real estate development loans, apartment building loans or the quick cash required for fix-it-and-flip-it real estate investors, the process of dealing with the bank is often more hassle than it is worth.  Utilizing a hard money loan is a great way to overcome the many rules and regulations of a conventional loan program, especially when looking for a short term loan.  Here are the biggest advantages using a hard money loan.  

Hard money loans have high approval ratings.  A bad credit score will not cause a potential investor to be turned away because approval is given based on the collateral value of the property. Most lenders will finance up to 70-percent of the property’s collateral. Some lenders will even let a borrower use personal assets as collateral. These personal assets could be a current investment property, a residential property or a retirement fund. Having cash on hand will also increase the approval rating of the hard money lender. Be ready to pay for any underwriting fees or closing costs as many hard money lenders will require this upon agreement.

Hard money loans are quick.  A hard money loan is based on collateral at hand instead of a credit score or personal income verification. Money can be obtained in a matter of days as opposed to weeks or months. This is huge for investors who plan to venture into markets where decisions must be made quickly. The ability to bypass the red tape of a bank lending program and have cash on hand gives the investor an enormous edge in today’s hot markets.  Because a hard money loan is often in competition to beat the time-frame a conventional loan program provides, long approval times are overridden and excessive paperwork is avoided.

Hard money loans are adaptable.  A hard money loan is based on the relationship a lender has with the investor. Hard money lenders aren’t as apprehensive about compensation, because they have the ability to seize the collateral promised to them if the money isn’t reimbursed, so payment periods may be adjusted to suit individual needs and circumstances. They may also be negotiated within terms that are more flexible than traditional loan programs.

For investors looking to find a short term loans in today’s quick moving markets, hard money lenders are a great resource to learn about and to potentially utilize. Their high approval ratings, speedy processing times and flexible negotiation terms are the biggest advantages to using hard money loans.  Think outside of the traditional financial box and use one today.