Hard money lenders can be defined as “third-party” private money lenders. This is the furthest type of lender from a borrower concerning the relationship involved. However, hard money lenders are considered to be some of the best private money lenders because of their reliability, and standardized interest rates, fees, costs, and generally reasonable loan terms.
Private money loans can be incredibly helpful for investors who seek to make quick purchases and fix up investment properties that are in poor quality condition. They generally have rapid pre-approval processes and fast funding times. These are two of the most significant advantages of private money loans. However, they do have their disadvantages as well. These include higher interest rates and short loan terms.
The pros of private money loans include:
• Low credit qualifications.
Third-party private money lenders would usually only require a minimum credit qualification of around 550 from the borrowers.
• Fast approval and fast funding.
Private money loans can typically be approved and issued in a matter of days. Hard money loans, as an example, could take as little of 5 minutes for approval and a matter of 10 days for funding.
The cons of private money loans include:
• A shorter period of paying back.
Private money lenders usually require shorter payback periods when compared to regular mortgages. Typically hard money loans have terms that include payback between 1 to 3 years.
• High interest rates.
Private money lenders typically charge higher interest rates than conventional mortgages.
While all private money loans have their pros and cons for potential clients, they can be incredibly helpful for the requirements of investments that need to be made as soon as possible. Through the right private money lender, clients can receive their loan with as little hassle as possible, and quick services.
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