If you’re looking for a mortgage to buy real estate, refinance an existing property, take out a second loan or invest in a flip, private lending may be an option to consider.
1. Greater Flexibility
Some borrowers may have been turned down by traditional financial institution or they don’t want to go provide the lengthy paperwork required from a bank or traditional lender. Private money lenders only require minimal paperwork.
The interest rates for private money loans are higher than traditional lenders, but the benefits may outway some of the negatives. Private money lenders can fund loan very quickly and the paperwork requirements are streamlined and minimal.
If your credit is less than perfect, most private money lenders are not concerned with this and will still offer you a loan because of other factors. Most private lenders are equity-based lenders and arrange loans because of the equity and the collateral property.
2. Fast and Streamlined Processing
Private money lenders can make fast decisions and do not require the same amount of paperwork. Most private money lenders do not require all the lengthy financials, bank statements, tax returns, paystubs, that traditional lenders must have.
Furthermore, traditional lenders are often required to follow different rules and regulations, particularly following the 2008 financial crisis. The reason why this financial crisis occurred was that lenders approved borrowers for loans that they could not afford. Therefore, when these borrowers were unable to pay back their loans, both the lenders and the borrowers suffered the consequences. It can take over a month for a traditional loan applicant to be approved, while those applying for private money loans can be approved after a few days.
3. Hard Money Lenders Make Their Own Decisions
Private money lenders have greater control over the lending process. Most private lenders lend their own money and can make exceptions when the borrower or the property does not fit in a perfect box. Banks and traditional lenders have rigid lending guidelines and the borrower and the property have to qualify and fit within those lending parameters. Private lenders make their own rules and have their own unique and flexible lending guidelines to make exceptions to make the loan work.
4. Fast Approvals
Most private money lenders can offer you a fast loan approval and commitment. If they can arrange a loan for you, they can tell you within days and not waste your time, to disappoint you weeks later.
Ask your private hard money lender to send you a loan commitment letter or Letter of Intent that they can and will offer you a loan. Save time and headaches by using private money to satisfy your financing needs.
There are a lot of different benefits of working with a hard money lender. These are just a few. But if you’re in need of a loan to help you secure a property to flip, why not turn to a hard money loan first?