Top 5 Benefits of Hard Money Loans for Real Estate Investors
Real Estate Investors Looking into Hard Money Loan Rates?
One of the major considerations investors may have is Hard Money Loan rates. Therefore, it’s time to understand the factors that affect hard money loan rates. Hard money loan rates are based on nuances of each deal, especially the equity available. Hard money loans are usually issued by private companies or investors and are generally shorter in duration. Because they are higher risk, they often have higher interest rates. The actual hard money loan rates are often not considered overly significant because the loans are based on a short-term payoff.
Regardless here are a few of the many benefits of hard money loan rates for real estate investors in Colorado:
#1. Faster approval
When applying for a mortgage through a bank or another institutional lender, there are countless hoops to jump through, and the paperwork alone can be a nightmare. And once you get through the application process, then there’s the waiting. But applying for a hard money real estate loan is straightforward, simple, and, best of all, fast, which is important for investors buying in hot markets, like in Colorado. Fast approvals are one of the highest considerations that will nullify the effect of hard money loan rates that may be a little higher than normal interest rates. If you need money fast, you will probably be willing to pay a little more, which will also incentivize private lenders like Abbey Mortgage to invest in your deal.
#2. Less stringent requirements for approval
Traditional lenders have strict requirements for the borrower’s income and credit, and if you don’t meet these criteria, your loan application is likely to be declined. Since hard money loans are based on the value of the property, as well as the borrower’s down payment, applicants with less-than-perfect credit and income are more likely to be approved. While this is not a compensating factor, these factors do affect hard money loan rates.
#3. Stronger offers
All too often, banks and other conventional lenders will pull financing from a buyer during escrow because of an underwriting issue. Hard money lenders rarely pull funding for the kinds of capricious reasons that other lenders do. This means that, if there are multiple offers on the real estate you’re after, a hard money loan will help to strengthen your offer.
#4. Greater flexibility in repayment
When you work with a bank or another standard financial institution, how and when you repay your loan will be completely up to the lender. But, with a hard money loan, you’ll have a lot more flexibility to find a repayment agreement that works better for your needs. Hard money loan rates will often help determine if a deal will be refinanced with a private lender or if the investor will seek a bank-backed loan at a lower rate. Our hard money loan rates are higher than typical bank loans. However, because of the ease of doing business with us, our borrowers tend to stick with us, often refinancing multiple properties on a short-term basis, often to get cash out of their investments to buy into other deals.
#5. Quicker funding
Not only are hard money loans approved faster, but they’re also funded faster. With a bank, you’ll be waiting between 30 to 45 days to get your loan funded, and that’s only if nothing goes wrong. But once you’ve been approved for a hard money loan, you’ll get the funding you need within one to two weeks typically. And if you need the money even quicker to save a deal, some hard money lenders can get your loan funded even faster.
For investors, hard money loans are beneficial in many different ways.
These are just a few of the many benefits of hard money loans for real estate investors. As you can also see, hard money loan rates are affected by a myriad of factors. If you’re a real estate investor in Colorado looking for the right loan for your needs, contact the professionals at Abbey Mortgage & Investments. We are here to help find the right loan for you, so do not let the hard money loan rates scare you off! Contact us today to get started.
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