Real estate owners and investors know the ownership, purchase, and/or upkeep of a property requires capital. While in some instances a borrower will work with a conventional lender, such as a bank, to receive a loan, borrowers may have to take another route. Traditional lenders may not approve a loan or borrowers may need a loan fast and getting approved for a conventional loan can be a painfully slow process. But a hard money loan from Athas Capital Group can get borrowers the funds they need. Let’s review how these loans work and their benefits.
Understanding a Hard Money Loan
If a borrower needs a loan quickly or traditional lenders will not approve a loan, a hard money loan is an option.
Hard money loans are a type of asset-based loan financing in which a borrower receives the funds secured by real property. They are typically short-term and lenders loan money based on the property you’re using as collateral.
When to Use a Hard Money Loan
Hard money loans aren’t appropriate for all types of deals. They are suitable for the situations such as fix and flips, land loans, construction loans, and when the buyer has credit problems.
The Benefits of Hard Money Loans
There are several benefits of hard money loans. They include:
- Fast funding of loans: Since lenders are focused on the collateral and less concerned about your financial situation, the loan process for a hard money loan is much faster than a traditional loan. Lenders focus less on ensuring you have a high enough credit score, verifying your income, reviewing bank statements, and so on, and depend more on value of the property.
- Fewer restrictions for borrowers: Many banks and credit unions have strict rules by the Federal Reserve they must adhere to, which makes it difficult for borrowers to receive loans. Hard money lenders, on the other hand, have their own set of regulations and standards that make it quick and easy to approve borrowers.
- Flexible term structure: Hard money loan agreements can be more flexible than conventional loan agreements. Lenders don’t use a one-size underwriting process. Rather, borrowers are evaluated individually and, depending on your situation, you may be able to adjust items, such as the repayment schedule.
- You can borrow more: When applying for a conventional loan, you have to put down at least 5 percent of the purchase price, in which banks will encourage you to actually put down 20 percent. With a hard money loan, the lender may be willing to lend you 100 percent of the purchase price.
Recognized as the nation’s leading hard money direct lender, Athas Capital Group is happy to work with you to get you the funds you need. Contact us today to learn more or to get started.