Have you ever been in a financial situation that requested urgent almost instant solving? Those are the moments that in many ways can shape one’s life and determine his future. To take a risk on those who are asking for a chance to explain their idea and hope to get a partner in a hard money loan, real estate investors, different businesses of all sizes, entrepreneurs, creative and brave all together here.
You can understand that with risk comes a price. But firstly hard money loans give a chance the group of people who did not get the understanding, moral backing and the financial support from all they have asked and they have a limited period to resolve the situation. Because of this facts, this is the last resort to come to and the land of salvation for some. These are investors ready to take a partner role with you, and they can help you when you need it the most.
Investors know that if you want to buy a property, you have to make your move quickly, because of the procedure in the bank that will require at least 1-3 months to approve your loan this is not an option. Hard money loans are finalized in a period 3-12 days, giving investors time to close the deal in hand. Hard money loans are privately funded loans, meaning there can be one or more lenders to in the package you are willing to take.
The lender in the requirements varies from one lender to the next, depending on the potential investment. The lender is above all interested in the collateral, and equity protection of its investment. Note that hard money lenders charge a higher than the average interest rate when compared to the banks’ conditions, but offer a life-belt in the emergency in a potential investment project.
The fact that banks don’t allow to do business where there is no guarantee that they can get their money back opens the door for hard money lenders who are focused on loan to value ratio (LTV) when you apply for a loan. Time is of the essence when you are doing business in real estate, with no income verification checks, with fast loans, hard money lenders will assist you in the project. You can get a loan even if you have credit, an excellent option for a short term financing solution in such a case.
For these unconventional borrowers, they base their decision on the loan on your property itself – collateral, more than your capability to repay the entire debt to them. In this type of loans are fix and flip loans, construction loans, bridge loans, and owner-occupied loans.
Besides the flexibility of the hard money lenders have in choosing their investment partners, some factors can lead to rejecting your loan request. Not putting down enough equity meaning low valuation of property in comparison to the investment, bankruptcy is a clear signal od rejection for a loan, not a sufficient enough business plan to ensure success, in the end, can lead to denial of the investment.
We hope that this information will help you when you genuinely need it and give you another option to consider.