A lot of investors who run out of luck with loan with loan applications in banks and other traditional financial institutions would find themselves looking for other options. Most of the time, people who are pushed to the wall would run to hard money lenders.
These lenders offer a type of financing called hard money loan, which is asset-based. Most of the time, lenders of hard money would assess the value of the property for which the loan is being made. If lenders think that the asset to have a great potential, then the loan application is likely to be approved.
There are various reasons why people consider getting hard money loans. They are the following.
Application process is fast. The loan amount can be made available after 5 to 14 days after applicant submit all important documents.
The required documentation is very low. The funds are based on the value of the property. Hence, only the property matters most for hard money lenders, unlike traditional lenders.
Borrowers with bad credits are welcome. Foreclosure, bankruptcy and FICO scores are not a problem when applying for hard money loans.
Foreign nationals are allowed to get a loan. Non-US citizens or other foreign nationals can easily get a hard money loan, but they will be have a hard time getting a loan from traditional lending institutions.
Lenders of hard money will lend on high risky deals. Non-profit organizations and churches can avail of hard money lending too. Such organizations are not usually granted a loan with traditional lenders, which are concerned to get bad publicity when they will foreclose a church loan.
Personal guarantees are not required. Hard money loans are based on the value of the property. Therefore, there is no need of personal guarantees unlike banks that always require one.
They offer flexible loan to values. Lenders of hard money are more flexible than traditional lenders because the lenders of hard money will decide what loan to values will be accepted based on their interest for the project, equity participation and more. Banks and other traditional lenders will reject a loan if the loan to values is too high.
Subordinate liens are acceptable. Hard money lenders will lend money regardless of the position as long as there is the value for the property. Banks may lend on a second, but not a third position. Traditional lenders always want to a first position.