What are the advantages of hard money lending vs. traditional bank loans?
So unless you have a rock-solid credit history, a high income and can wait up to three months for a loan, you are probably better off looking into hard money lending from a reputable privatelender.
What are the benefits of hard money loans? Well for starters, they are not as strictly regulated as banks are. As such it is much easier to obtain the funding you need as private lenders tend to be much more lenient.
Another one of the main hard money benefits is the fact that you can get your loan in a much shorter period of time. This is critical, especially if you are bidding on a property such as a foreclosure or estate sale. You need to act fast. A traditional bank loan will take at least 30, oftentimes 60 days to come through. A good hard money lender can have your funds to you within two weeks...that's quite a difference!
Here are some more benefits of hard money loans vs. traditional bank loans:
1. Many banks will not fund rehab projects...so even if you are qualified, a regular bank might not want to give you the money for your project.
2. Banks usually want a substantial downpayment...often up to 20%! Hard money lenders will not require a downpayment. This is a huge advantage for you.
3. Traditional lenders often charge a prepayment penalty for paying the loan off early. This can be significant, so if you aren't careful you can really get stuck. Reputable hard money lenders will not charge a prepayment penalty on any loans they offer.
4. Hard money lenders work almpost exclusively with real estate investors like yourself, so they know the industry inside and out. Traditional banks give any number of commercial and personal loans and don't have any programs tailored to the real estate investor. A private lender can create a special program that fits your needs, with terms and options that work for you.
So those are the main hard money benefits to consider. If you are interested in a hard money loan for your next project and would like to get prequalified, just fill out our secure Hard Money Guide Contact Form and one of our leading hard money experts will contact you as soon as possible.