As a real estate investor, you can now rely on hard money loans to finance your new projects instead of struggling to raise the entire amount required to do so. This involves pledging collateral to private lenders that can be individuals and financing groups among others. Most of them will be willing to process your application regardless of credit rating.
Pros of relying on hard cash financing
- Quick processing
In approving applications, lenders are mostly interested in getting back their cash and this is usually guaranteed by the pledged property in hard cash loans. It is therefore possible for an application to be approved the same day it is sent in and there are borrowers who are able to access the processed amounts within 3 days. This is pretty fast compared to dealing with banks and other lending institutions.
- Few, easy requirements
Borrowers are required to satisfy only a few requirements when dealing with hard money lenders and this makes them available to numerous consumers. With some valuable property to pledge, you will be assured of qualifying for the amount you need even with a history of foreclosure and defaults among other negative marks. The other simple things that may be considered include:
- Available down payment or applicants equity in the property
- Applicant’s experience in similar or related investments
- Repayment strategy
- Flexibility in use
Before lending out their cash, conventional lenders have to fully understand the intended use of the required amount and chances of an application being rejected are usually very high. Hard cash guaranteed loan people bad credit providers will be ready to process applications even when applying for short term funding to handle smaller projects like general repairs, putting up new additions and reinforcing foundation among others.
How do interest rates compare?
The interest rates are relatively high compared to what conventional financing institutions would allow for similar applications. This happens because giving out hard cash loans involves greater risks including releasing funds regardless of past credit history and considering slippery projects among other things. There are situations where you may be required to place a down payment especially if you don’t have enough equity in the property.
Apart from the interest rates, you will also be required to settle an origination fee that usually accounts for 2-4% of the required financing. You can considerably lower your cost of borrowing by researching on different offers from various private lenders and quotes are now easily accessible online. This is where you should be concerned with the major features including interest rates, fees, extra charges and repayment terms among others.
Be keen on affordability
Failing to stick to the agreed loan terms can see you lose your property and this can also have a negative impact on your credit rating. This is why you should evaluate the repayment terms for the funding you need and ensure that they are favorable. There are many hard cash loan lenders available today so finding an affordable offer should be pretty easy.