If you are looking to fix up your property or to secure a new home, someone may have recommended the services of hard money lenders along the way. Conventional loans might seem like a more secure option to you, and that is only natural: they are conventional because they are the most common. If you find yourself in a non-traditional situation, then this non-traditional loan style might just be the best option for you.
Traditionally, there is a set of standards most conventional bankers look for when considering whether to issue a loan. Banks are the most common source of funding like this, and there are a few key distinctions between the two entities. When a bank evaluates a candidate, they look at their credit history and income, then try to gauge the recipient’s ability to pay the money back quickly based on the combination of these factors.
Also called asset-based backers, hard money lenders are private investors, and they’re primarily used when one desires to purchase real estate. Here, the collateral that backs the loan is the investor’s primary focus, rather than the combination of all those elements in which the banks are typically invested.
One of the biggest advantages of choosing the services of hard money lenders versus doing business with banks is the amount of time it takes. Specifically, because loan providers of this nature are typically private entities, the process of procuring your loan tends to move more quickly than it would through a bank.
If you have a limited amount of time to work with, talking to your local granter might be your best means of securing the necessary funds quickly and efficiently. It also works in favor of folks who work from home and have limited or poor credit. If you have solid assets to back the funds you hope to acquire, then it becomes a better shot for you.
Procuring loans of this nature is a wise decision for people who make their living flipping real estate properties, or owners of multiple properties looking to sell one and purchase or renovate another. It’s also advantageous if you are looking to purchase a property with a limited amount of time attached to it, such as in the case of a short sale.
Because there are many situations in real estate that require a quick response time, choosing the services of hard money lenders provides you with a quick and easy alternative. You do not have to wait long to find out if you will be approved for your loan, so it’s that much faster to get moving toward your final goal.
It is imperative that you do all your research thoroughly before deciding if hard money lenders present the right solution for your particular situation. Low-interest rates and a short waiting period might be tempting, but in spite of this, it may not be the best fit for your situation. However, when it comes down to speed and flexibility, this is the path to take toward your real estate dreams.
By Andrew Watson