Every real estate investor knows that without money, there’s no deal. They also know banks and mortgage companies aren’t always the best solution for funding projects. If you’d rather fund real estate investments without using traditional financing, consider hard money lending. Here are a few reasons why private money lenders are often considered a dream for real estate investors.
Money in Your Hands Faster
If you’ve ever applied for a traditional real estate loan, you know how long it can take. Time is of the essence for real estate investors. Without fast funding, you run the risk of losing out on lucrative deals. Private money lenders understand the importance of buying, rehabbing, and selling a property quickly. Most private lenders can fund your project in a few days. Some can put money in your hands in a matter of hours.
Less Bureaucratic Red Tape
Traditional lenders require what feels like reams of documentation before they’ll close on a loan. Often it’s the documentation that holds up a loan. You lose time, and as mentioned above, time isn’t your friend when looking for good real estate deals. It’s not only time, but the loan process with a bank or mortgage company can also be invasive. These lenders want to know every detail of your past, present, and future financial life. Private money lenders, on the other hand, aren’t so concerned with your private life. Private money loans are usually asset-based. If you have collateral that qualifies, you’ll get the loan.
No Worries about Hidden Fees
When you closed on your first real estate loan, did you really understand what you signed up to pay? Most people understand they’re paying for the property, interest on the loan, and certain costs to close on the loan. What they don’t understand are the fees added on by the lender. Often, there are multiple fees obscured in the loan documents. When you’re at the closing table, you’re fed document after document. The closing specialist does explain the documents you’re signing but it all happens quickly. You may not realize what fees you’ve agreed to pay until you take time later to read the documents you’ve signed. Private money lenders who specialize in investor loans, don’t hide fees. You’ll know upfront what you’re borrowing and what you’re required to pay back.
More Leniency with Credit Scores
Traditional lenders focus on credit scores. If you have a bad credit score, foreclosure, or bankruptcy on your credit record, you may have difficulty getting approved for a loan. Investors applying for hard money loans in San Antonio generally experience a more lenient credit scoring process. Private lenders do look at credit, however, they’re often more receptive to investors with lower credit scores. If you’re applying for a conventional mortgage, you’ll need a credit score of 640 or higher. Private lenders typically require a credit score over 550.
Unlimited Borrowing Opportunities
Most banks and other traditional lenders limit the number of mortgages to between 4 and 10 per borrower. For a serious real estate investor, this limitation can prevent any substantial growth. Your funding opportunities with a private money lender are generally more generous. If you can prove you’re a good risk and have qualified collateral, there isn’t a limitation on the number of hard money loans you can apply for.
We’ve covered just a few reasons why private money lenders can help a real estate investor’s dreams come true. If you’re looking for reliable and fast funding for your real estate project, contact Investor Loan Source. We understand real estate investing and know how to get a project funded with minimal paperwork and inconvenience to you.