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Some Advantages Hard Money Loans

Quick Loan Approvals: You can get it approved far quicker than traditional banks or financial institutions – which may take at least 3-4 weeks. In many cases, a borrower can receive approval and financing within a week – especially if requested documents are presented in a timely manner. The main reason hard money lenders are able to approve loans quickly is that of the short list of required documents and the smaller size of the lender’s organization which doesn’t have to deal with the corporate red tape that banks do.

Lenient with Credit History: It will also be more lenient with your credit history. If you apply for loans from top financial institutions, one of the main factors they will check is your credit. If a borrower doesn’t fit within a bank’s strict “credit box”, the chances of qualifying for the loan becomes significantly lower. In the case of hard money lenders, credit history doesn’t matter as much as the value of the asset and the borrower’s equity – or “skin in the game”. As long as both meet the expectations of the lender, you have a good chance of obtaining the loan.

No Prepayment Penalties: Another significant benefit is the absence of prepayment penalties. If you take out a loan from a large financial institution, you would most likely be hit with a prepayment penalty if you pay off the loan prior to the maturation date. You can avoid these fees by opting for hard money loans. It is not difficult to find a hard money lender willing to lend you money without prepayment penalties baked into the term sheet.