Most private money lenders can process and underwrite your application in one business day or less. That assumes you sent in all the necessary documents and completed the paperwork completely. The funding and approval process is often out of your control and will often take more than a week. The reasons for why it takes so long will vary, but it’s mostly because each loan is different and will require specific approval. The hard money lending industry used to be filled with companies looking to pick the pockets of those that were hit hardest by the Great Recession. Thanks to a major overhaul of the finance and lending industries as well as a considerable amount of new oversight these characters have been swept out of the market and are no longer able to prey upon hard-working people just looking to get ahead. Hard money – or private money – lending is big business right now, and if you are hoping to take advantage of this kind of lending opportunity you likely have more than a fair share of questions you’d like to have answered before you dive right in. For starters you’re looking at an industry that’s more flexible and a lot more adaptable than traditional lending from banks and credit unions could ever hope to be. Private financing companies have a considerably lower threshold when it comes to the kinds of credit scores that they accept for these kinds of loans, and they are huge on credit forgiveness in a way that big banks and credit unions could never even hope to be.
Secondly, the kind of funding that they provide can be taken advantage of almost immediately and the loan terms that you are signing up for are going to be pretty short. We’re talking about twelve-month loans in most circumstances, though these terms can often be extended out to between two and five years if necessary. Finally, the big point of these loans is that they are secured by the property that they are being taken out to invest in to begin with. These loans usually only involve monthly payments of the interest rate (and maybe a small piece of the principal), with a larger balloon payment expected at the end of the payment term – usually when a property has been flipped or sold.
How quickly can I get my hands on a private money loan?
Depending upon the service that you choose to take advantage of when you are pursuing a hard money loan, you may be able to access your funding within a week or maybe 10 days, though the overwhelming majority of top-flight businesses will get you your money even faster than that. With traditional loans, it usually takes anywhere between 30 days and 45 days to get the loan completely funded. Credit unions and banks are notoriously slow moving when it comes time to fund these loans, and for real estate or construction professionals that are looking to take advantage of hot opportunities as they come down the line they just aren’t all that effective. Hard money loans, however, with their almost instant funding process are going to guarantee that you get your hands on your money just as quickly as humanly possible. You’ll be able to put this capital to use with lightning like speed, leveraging this funding opportunity to make your financial dreams a reality ASAP. A good way to compare services is to use an online guide or list of companies. There are many services that claim to provide comparisons online. This site has a listing of most private money lenders in the State of California. With this list you can choose between companies that provide online loans and factor in the interest and origination fees. There are also options available to sort the lenders by the different features. These features include the amount of interest charged and amount of capital needed to fund a loan. We will soon unveil an option where you can compare each lender based on the state you live in. That means someone in California could choose from a list of hard money lenders that are only funding loans in that specific state. Additionally they can further narrow down their choices by comparing lender terms, rates and payoff times.
It also doesn’t hurt that hard money loans can be taken advantage of for a variety of different property purchases. Traditional lenders likes banks and mortgage companies can reject loans – conventional loans – for a number of reasons. Most are usually pretty risk averse to any type of real estate transaction. Private money lenders, because of their nature, may have a much higher tolerance for risk and may be interested in offering loans for projects that would never be funded by a more traditional bank or credit union no matter what. Again, you’ll need to make sure you are always working with the best lending operation, but once you take care of that you will be off to the races!