Why Real Estate Investors Prefer Hard Money Loans

2. Hard money loans are a financing tool every real estate investor should keep in mind. Besides speed and flexibility, there’re several other reasons real estate investors use hard money loans in California. In this blog, we will discuss about the top 4 reasons real estate investors use hard money loans. Fast loan approval & funding: Applying for a hard money loan is a straightforward process. All a borrower has to do is to fill out a standard loan application and provide some basic paperwork. In many cases, a borrower can get a conditional approval the same day after speaking with a private money professional. Compare this to the innumerable pages and documents a bank requires from a borrower for qualification. Once you submit the application to the bank, it could take weeks or longer to get approval or even a response. By that point the subject property could be snatched up by another investor. The fast process does not stop there. The funding process is also much faster with a hard money loan. With a hard money loan, once the investor has been approved for the loan, the loan can often fund very quickly. It is not unheard of for hard money loans to fund in as little as 3-5 business days – sometimes more quickly if needed. Income history & perfect credit score aren’t essential: When approving loans the most critical factors a bank considers are usually the income and credit score of the borrower. The loan will most probably not be approved if either of these is outside the bank’s criteria.

3. Hard money lenders, on the other hand, mainly focus on the equity in the property that will act as the collateral for the loan, as well as the purpose of the loan and exit strategy of the investor. The hard money lender should be comfortable with the valuation as well as the equity, as this is what is going to secure their funds should a default situation occur. Getting a loan approval with recent credit issues: Many issues on a borrower’s credit could prevent a bank from offering financing. There are many issues the banks take exception to, such as bankruptcies, recent short-sales, loan modifications, and foreclosures. Since hard money lenders are asset-based, they canoften times ignore these kinds of issues and focus on the borrower’s equity in the subject property. Hard money lenders are flexible: Traditional bank lenders are infamous for being very rigid & having arbitrary guidelines that prevent borrowers from getting loan approval. Though hard money lenders do have criteria a borrower meet to be approved, it’s considerably less than what’s needed for a bank loan. This can be especially true for investors, self employed individuals and people in unique situations that require “makesense” funding solutions. Here at All California Lending, we specialize in facilitating hard money loans in California. We can help with hard money loans for all property types. Get in touch with us now!

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