With the interest rates getting low and the real estate business in great demand due to less global area and increase in population, there is an exponential rise in traditional mortgage loan applications. Traditional funding system takes more time to process the application, and the possibility of rejections might be huge.
In the past few years, private money lending or hard money lending has grabbed the attention of many real estate investors because it combats the delay in traditional bank funding.
Who should choose private or hard money loans?
Even though private money loans can be comparatively easy to obtain, not all investors can apply for them. It solves certain problems that most investors face in common. If you are keen on availing a mortgage loan from a private money lender, then check if you face the below problems and need an all-in-one solution:
- Quick Funding:
Loans from the traditional system like banks take a minimum of approximately 30 to 45 days to process and approve the loan application. With the growing demand in real estate investing, more applications are being processed by the banks. So, there will be more delays.
The first and foremost reason why you can choose private money lending is that with this, a loan can be approved within a week. In some cases, it can be approved within a day or two. If you are in an urge to get a mortgage loan to lock a property before it is sold to other bidders or competitors, then instead of waiting for a long time for the bank’s decision, you can approach private lenders.
- Insufficient income history:
Banks require that you have a sufficient history of income to make you eligible for a mortgage loan. Suppose that you are self-employed or have only a year of experience working in a proper salary-based structure and don’t have a history of IRS, or you don’t have an income source within the required limit, then your application will be rejected.
Private money lenders only look if you have enough money flowing currently to properly pay the interest and the principal, they don’t care much about your income history.
If you do not meet the income history requirement, then private money will be the best option for you.
- Credit issues:
A demanding credit score is required by banks to verify if you can pay back the mortgage. However, for an investor without any debt history, the traditional loan method is not a cup of tea. Those real estate investors who don’t have a great credit history can look for private money lenders.
- Short terms:
Banks offer mortgage loans for a long term of 10 years or more. If you are a frequent investor who wishes to obtain a loan for a property for the short term, then using the profit made from the property through buy and rent, buy and sell, fix and flip, etc., then a repayment commitment of a shorter term will be appropriate for you. Private money lending will be applicable for this purpose.
- Less paperwork:
Though private or hard money lending requires documents such as proof of funds, letter of intent, etc., compared to conventional method that requires income and credit history, asset liability, etc., it involves less documents to be submitted.
- A friend or a family lending money:
When you have a friend or a family who has capital and likes to lend his or her money for your real estate needs, then he can act as a private money lender. In general, private money lenders quote a high interest rate for the mortgage, but with a friend or family, there is a possibility to get a low interest rate. However, they cannot offer zero interest because private money lenders have to satisfy the current federal interest value.
- Having a different purpose for loan:
There are various purposes for a real estate investor to apply for a mortgage loan such as buying a property, fix and flip, buy and rent, fix and rent, buy and sell, etc. Most banks provide loans for a ready to move-in property while an investor may require debt for fix and flip or buy and rent types.
Best agency for Columbus, GA Money loans in 2021:
Are you a real estate investor in Georgia earnestly looking for the best agency for Columbus, GA Money loans in 2021? Then “BridgeWell Capital” is your right pick. This private money lender uses its self-capital to provide mortgage loans for the following purposes: Rental or commercial property, Fix and Flip, Fix and Rent, Cash refinance, etc. Their requirement off you is straight forward and you can obtain loans quickly when you are struggling with the delay in the traditional loan approach.