A hard money loan is a specialized financing tool that is mostly used by the professional real estate investor. Only veteran real estate investor knows the benefits of the hard money loans and about its detailed working. The ones who are knew to the field need to learn about the benefits and working of hard loans and see their real estate business blooming.
The major advantages of Hard money loans are as follows:
swift and fast process- The biggest advantage of hard money is that it is funded and approved with utmost swift and quick process. The fast speed with which funding takes place is commendable. There have been stances where funding takes place in just a day. The hard moneylender considers the property, the amount of down payment, or the equity that he will get in the property, the borrower’s experience, and the strategy to be followed in case there is a loss and the cash or bank balance of the borrower to make the monthly loan payments. If everything is in place and seems to be fine the loan is granted. Real investors who have earlier not been in the field of hard money investment will be amazed to experience how fast hard money funding happens. In max 3 to 5 days the funding will happen as compared to the 30 day long process in case of the banks.
Few requirements of hard money loans- As stated above the hard money lenders have requirements as compared to bank loans. It includes the borrower having sufficient equity in the property, ample cash to make monthly loan payments, reasonable exit strategy, and ample experience if required. Thus with few requirements the chances of loan getting approved is high. In case of banks the lengthy list of requirements that a borrower needs to qualify for getting finance makes the chances of finance approval very low. Also the complex and time consuming process makes it tough to get the process complete. Also, the banks have red flags where they don’t fund the borrower.
Hard money loan is for projects, which cannot be, financed elsewhere- hard money loans finance the projects that cannot be financed by other institutions or banks. It could be in case of fix and flip loan. The projects involves a real estate investor to purchase a property with short term loan so that the investor can quickly make the repairs and updates and then sell the property at increased cost. In this case the real estate investor will need loan for just 12 month s or less and such short term loans don’t qualify with the banks and thus the purpose of loan from bank is not served. Even if the property has issues the banks will not finance it.
Associate homes is a pioneer in the field of hard money loan provider and has been in the field of financing the real estate investors and helping them grow tremendously.