There are a lot of people wondering why borrowers would even choose to go for hard money loans if it has high interest rates. People would often come to an immediate assumption that such borrowers could possibly have poor credit records that do not allow them to have any dealings at all with the traditional and many other conventional sources. You should know for a fact that there are hard money lenders out there that can look beyond specific circumstances such as the poor credit records, foreclosure, divorce, short sale, and even bankruptcy. Aside from this, there can be a lot of factors that would make a borrower eligible for private money loan.
Time Sensitive Loan
With conventional financial institutions and banks, they would take around 90 days, sometimes more, before you could close a loan due to some standard process and their strict rules and regulations that they are entitled to follow at all times. The best thing about hard money lenders is that they can process the loan in just less than seven days.
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The thing about private money lending is that it requires a lot lesser paperwork and it has a more flexible loan committee processes and guidelines as compared to other institutions or banks. What you might not like about doing it the traditional or conventional way is that they will have to require you a confidential financial information and have to fill up a load of paperwork before you can have your loan approved. A hard money lender would only tend to direct their focus on one aspect of the loan but with banks, you will have to give them your financial conditions, credit score, and job security among others.
The Flexibility It Offers Can Solve Your Problem
hard money lenders can be a lot more innovative with complex loan situations. You may even enjoy a more flexible terms than any traditional lenders could offer, or you could even choose to do cross-collateralization of other properties. There may also be a lot of issues that could hinder conventional lenders in financing a property and some of these issues include the need for a major improvement to increase the building’s occupancy, the construction is only completed partially, family issues, medical emergencies, and unemployment.
Making a Profit
Every time spent is money. Many borrowers have this goal in their minds when they look for a loan and to cite an example, it is the issue of how fast can they fund their loans. They are focused more on making a profit and private money lenders can offer them the time and smoothness of the process which is a lot more important than the higher cost that is involved in financing.
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