Obtaining financing through conventional lending institutions like banks is pretty involving and there are many borrowers who are now turning to hard money loans as a way of accessing the funding they need hassle-free. There are a number of benefits associated with borrowing from private investors personal loans lenders including:
- Fewer requirements with online sources
The requirements to be met when applying for hard cash are pretty few compared to those that one would need to satisfy when applying for the same amount with institutions like banks. Most lenders will look into simple things like the equity that the borrower has in the involved property, cash reserves, experience in the field of investment and exit strategy among others.
- Fast approvals right away
For some financial hiccups, loan applicants are usually left with limited amount of time to obtain the assistance required. Such persons can comfortably rely on hard money loans since they are usually approved within a very short time. This waiting duration is even shorter, sometimes less than 24 hours, for applicants who have developed a working relationship with a given hard money personal loans lender.
- Flexibility term and conditions
Traditional lenders are very keen on the projects that borrowers intend to finance using the funds that they are applying for and this makes it pretty hard for numerous applications to be approved. With hard money loans, the applicants will be considered for financing to handle varying problems including:
- Investing in real estates
- Mortgage refinancing
- Fix and flip loans
Cost of accessing hard money loans and their interest rates
Compared to lending institutions, accessing financing from hard money lenders will cost you more owing to their higher interest rates. This is so because the risks involved are pretty high and applicants are able to access the funds even with low credit scores. You should also be prepared to deal with higher monthly payments since the repayment periods are usually shorter, ranging between 6 and 24 months.
The lenders will be very keen on the subject property and they will try to establish the amount of equity that the applicant has in it. There are cases where they will even ask for a down payment as a way of reducing the risks involved. You should also be prepared to deal with points (fees) where these usually range between 2-4% of the amount being applied for.
Finding hard money lenders for real estate investors
You can easily find hard cash lenders by searching online and narrowing the search to your local area. The results can reveal a list of private companies and individual lenders. You can then proceed to compare their interest rates, points, approval speeds and repayment periods among other features. You can also rely on referrals to easily find reputable lenders.
There are numerous scams in the lending market today and you should be keen to avoid these when seeking hard cash loans. Most of them will try to lure you with attractive offers like 100% financing and extremely low interest rates among other enticements. Try to learn more about any lenders you pick and you can even ask them for references on previous deals.