subject: Hard Money Loans: Providing Great Convenience to Investors and Homeowners [print this page] Contrary to popular belief, hard money loans are not just for buying investment properties alone. This type of non-traditional financing has many uses and even conventional homeowners can get huge benefits by using it. Although some people discourage others from borrowing hard money because of its high interest rate, securing this mode of financing can help you in more ways than you can imagine.
As you may know, hard money is collateral-based. This basically means that you'll get funds depending on the value of the property offered as collateral. Because it is collateral or asset-based, a borrower doesn't have to go through conventional underwriting process, including credit checks and interview with loan officers, when securing hard loans.
Hard money lending is a popular financing option for many real estate investors when buying investment properties as it provides them with great convenience. For starters, asking hard money lenders for help instead of banks and mortgage companies help them save time since they don't have to undergo tough credit checks or file mountains of financial documents.
Life what was mentioned earlier, hard money loans are not just for securing investment properties. It can also be used to fund tricky real estate deals, like wholesaling bank owned homes. It is no secret that in most cases, there's a non-assignability clause that is attached to REOs. To overcome such a hurdle, real estate investors turn to hard money lenders to make a simultaneous closing possible. Because hard money can be released immediately, investors can secure the funds they need to "buy" an REO from the bank before flipping the property to their end buyers.
Hard money lending is also beneficial to ordinary homeowners who are having a hard time keeping up with their mortgage payments. A homeowner can save his property from being foreclosed by the bank by securing hard money. Since lenders don't depend their decision to approve or reject a loan application on a borrower's credit rating, a homeowner can secure the funds he needs to pay off his debts as long as the property he's offering as collateral has great equity.
In addition, a homeowner can still make it in time even if the bank has given him a week to pay off his mortgage. Hard money lenders are quicker to process a loan as compared to traditional financiers, which is why a borrower can get the required funds in a day or two.
