The pandemic and the resulting financial crisis made it hard for businesses to acquire bank loans. During this time, hard money loans rose to popularity and emerged as a viable financing alternative.
In this post, we will talk about what makes hard money loans stand out. Take a look:
One of the main reasons why hard money loans are extremely popular is that they have little, or no formalities attached—especially compared to bank loans. You don’t need to go through a lot of hassle, approvals, payments, and paperwork. Even after going through all the hassle, your loan can still be denied.
Besides, banks have a list of issues that could be potential red flags and prevent them from lending to you. These include short sales, foreclosures, bankruptcies, and even loan modifications.
Little credit requirements
A common reason why banks tend to reject your loans is a poor credit score. If you already have four mortgages on the credit history, they’re not likely to lend to you, even if the rest of the credit history has no issues. Banks are also reluctant to lend to individuals with no concrete employment history or consistent stream of income.
As a real estate investor who still has some issues on the record, hard money or private lender will still lend to you. Most private lenders are only concerned about the down payment or the equity. Ideally, you need to deposit at least 25-30% of equity to secure the loan. This guarantees that you’re going to make the rest of the monthly payments on time. Some lenders will also require you to make the balloon payment once the loan term comes to an end.
If you’re a potential borrower who would like to buy primary residential property with the help of a hard money loan, you’re in for plenty of benefits. You can qualify for a hard money loan even if you’ve already taken up a traditional bank loan. The key to smart investing is to make as many real estate purchases as you can and make the most of your hard money loan.
Global Capital Partners Fund LLC is your go-to option for affordable and dependable hard money loans in New York. They’re a renowned private lending firm primarily known for its commercial financing services. Get in touch!