Conventional banking, for many individuals, is a source of financing for business or personal purposes. Some people, however, may encounter problems in obtaining funding from traditional bank sources. Some real estate projects, for instance, require financing that conventional lenders are unable to provide.
The good news is that borrowers can apply for a hard money loan as an alternative financing option. Here are a few reasons borrowers opt for this asset-based loan over traditional banking.
They Don’t Want to Be Restricted by Underwriting Parameters
Traditional banks follow specific lending parameters. They base their guidelines on factors, such as location, asset class, market trends, and neighborhood makeup. Hard money loan providers, in contrast, do not restrict themselves to any specific set of parameters. They have the freedom to lend hard money on any project they see fit.
They Need a Higher Loan Amount
The guidelines set by conventional lenders may restrict them from offering higher loan amounts. Hard money lenders, in contrast, are flexible in providing a high loan amount that a borrower may need. These lenders can establish acceptable limits that are different from a traditional financial institution.
They Need Faster Closing
Conventional banks can take one and a half to three months (sometimes even more) to qualify, process, and close a loan. Conversely, lenders offering hard money loans can process an investment agreement much quicker. They require much less documentation and don’t perform the bank-level reviews to close a loan.
They Have Real Estate Equity, But It Doesn’t Provide Cash Flow
Traditional financial institutions assess the income generated by an investment in considering financing. On the other hand, hard money loan providers place more attention on the underlying asset. This enables them to be more flexible in their validation for hard money financing.
They Need Short-Term Financing
Hard money loans, by definition, are short-term loans. These loans, therefore, can be an advantage for borrowers looking to improve or remodel property for eventual sale.
They Have a Problem with Their Credit Rating
Conventional banks impose strict credit requirements for borrowers. Individuals may find it difficult to secure a loan at these financial institutions if their credit score is below 650. On the contrary, hard money lenders are willing to take a higher risk by requiring a higher interest rate than the bank and using the property equity. A lower credit rating, therefore, may not automatically prevent a borrower from obtaining a hard money loan.
Make Monroe Funding Corporation your first choice for hard money financing. As a trusted hard money lender in Miami, we offer flexible real estate financing options. The hard money loans we provide are suited to your property investment needs.
When you choose us as your hard money loan provider, you’ll enjoy competitive rates and customized repayment plans. On top of that, we offer quick approvals. You can secure a pre-approval within a day or two for as long as you meet our requirements.
Get in touch with us today to get the funds you need.