When you need a higher than normal amount of cash, hard money lenders might be the best approach to ensure you’re going to get it. What’s the difference in working with hard money lenders, as opposed to traditional lenders? For starters, they’re going to afford you a higher lending limit than you’d get with a traditional bank or lender you’d work with. Additionally, you’re putting down real assets to back your loan and the fact that you’re going to repay it. This means you’re putting down a home, or something of high value, so they’re more willing to work with you as a borrower, as opposed to someone who won’t put down that collateral.
Benefits of hard money loans
You have to put down real assets, and in some cases, people run the risk of not repaying on a hard money loan. So, why is this a beneficial option as a borrower? There are many reasons that hard money lenders are a great option and route for you as a borrower, even though you are putting down major collateral to borrow. Some of the benefits include
- More cash instantly than you’d get with basically any bank or private lender
- Quick approval
- Most borrowers are going to repay (since you’re putting down so much, you have more incentive to repay)
- They offer long repayment terms, extending 30 years (or longer in some cases)
- The approval process is quick, and most hard money lenders are not going to do credit checks or other income verification
- You’re going to receive cash to make major investments in real estate, commercial, and residential transactions, that you otherwise would not be able to afford engaging in as an investor
There’s always a risk when it comes to borrowing, therefore this is something you’re going to have to weigh as a borrower. However, when it comes to risk averse borrowing options, a hard money loan is a great option when you need high amounts, and quick cash for a transaction or investment you would like to engage in.
When the time comes to take out a hard money loan, it’s important to know what you’re doing and that you’re working with a viable, reliable lender as a borrower. Take the time to understand the process, how much you can borrow, and what you can expect as a borrower, in order to ensure you’re ready for a hard money loan and the repayment terms you’ll be afforded as a borrower.