Getting approved for a traditional loan is harder than ever with rules getting stricter all the time. The wait time is also very long without any assurance that you will get approved. This is a dilemma, especially for property flippers who need the money right away in order to obtain new properties.
Fortunately, there are various private hard money lenders, such as Monroe Funding Corporation in Florida, that can help you get the financing you need as fast as possible. Hard money loan is simply a way to borrow money without having to go through traditional mortgage lenders.
It is a short-term bridge loan backed by the value of the collateral and not by the credit standing of the borrower. Here are some of the many advantages of a hard money loan.
1. Faster Loan Approval
With a traditional loan, you can expect approval to take a month or more. But, with a hard money loan, it will only take less than a week. This is because hard money lenders would often overlook the credit history of the borrower and focus on the value of the asset used as collateral instead.
2. More Flexible
When you borrow from large financial institutions, especially banks, you will have to conform to their set payment terms. However, private hard money lenders are more flexible.
Discuss the payment terms with them and come up with a repayment plan that is agreeable to the both of you. It’s also possible to pay off the loan before its maturation date without any prepayment penalties. It is not the case with bank loans.
3. Less Strict Requirements
Applying for a traditional loan requires submitting a lot of documents. You also need to meet all of their strict requirements to qualify. Additionally, they will meticulously go through your credit and income history. If they find something unfavorable, you can wave goodbye to your loan.
Private hard money lenders, on the other hand, are less strict when it comes to their requirements. They may even overlook a bad credit score provided that you have a high-value property with more than 20% in an equity stake in it.
When you are having a difficult time getting a loan, hard money lenders are the next best option.