Choose Between A Mortgage Company Or Private Money Lender

Most applicants who apply for a hard money loan know they don’t qualify for or even want a traditional mortgage. This can happen because they need fast cash or they don’t meet the necessary credit requirements. But what happens if you qualify for both options? Several benefits come with getting a hard money loan, even when you qualify for a traditional mortgage. These benefits are why so many people have started applying for the various types of hard money loans that exist. It is essential to know these benefits before making a final decision either way.


Fast Funding Approval With Customized Loans

One of the reasons many people are taking out private money loans is that the whole process of getting them is much faster than with a traditional mortgage. If you want your money quickly, a hard loan could be your best option. Many people get the funds they need through these loans in under a week, whereas a traditional bank loan could take up to a month. When you are looking into hard money lenders, you will want to find out how quickly each one can disperse your funds.


Flexible Payments & Payoffs

Private lenders offer a lot more flexibility in making payments than most banks. These lenders create customized loan plans so that the borrower can be in the best position possible to repay theirs. If you take out a traditional loan through a bank, you must agree to the terms they set. With a private lender, however, you can negotiate a repayment plan that works well for both parties involved. The more flexible your repayment plan is, the better your chances of paying off the money you borrow on time.


Easier Approval With A Non Traditional Private Lender

Most banks require applicants to have good credit to get approved. Another one of the reasons that hard loans have become such a popular borrowing option is that private lenders don’t care about applicants’ credit scores. If you have something like a foreclosure or bankruptcy on your credit report, though, it could be a problem. Those who have bad credit and cannot get a traditional mortgage through a bank should at least consider this option.


Choose between a mortgage lender or hard money lender.


Fewer Requirements From A Private Money Lender

When you try to get a mortgage through a bank, they will take a very close look at your income history and many other things. The underwriting department will also consider things that don’t matter to most private money lenders. They’ll look at applicable conforming loan limits and requirements set by Fannie Mae. One thing that matters to a hard money lender is the potential income generated by your property. The more valuable your property is, the better your chances are of getting approved. Your lender wants to make sure they can recoup the invested funds if, for whatever reason, you miss payments or fall behind on the mortgage obligation.


No Prepayment Penalties For Customized Hard Money Loans

Those who take out a traditional mortgage through a bank will face pretty hefty penalties if they pay off their loan early. You won’t have to worry about being charged extra if you repay a hard moan loan before the due date. Those who run into some extra money and decide to pay off their hard money loan early will not have to worry about incurring any penalties or fees at all.


Things to Consider When Making Your Financing Decision

While it is true that there are a lot of benefits associated with taking out a hard money loan over a traditional mortgage, there are some drawbacks. You will almost certainly pay a higher interest rate and other fees. Case in point, most companies in our featured database of hard money lenders have posted terms that are much higher than traditional banks and mortgage companies. The rate that you pay will depend on the type of loan you get, but it will likely be higher than a loan you get from a bank. You must consider your financial situation before choosing one option over the other. Hard money loans have much to offer investors, but they aren’t suitable for everyone.