Hard money lending, also known as bridge loans, is usually done by private lenders. As opposed to the mainstream financial institutions, these firms do not normally have much documentation. Also, the government strict underwriting guidelines do not apply. Hard money lenders Seattle as entrepreneurs, therefore, are important for the guys who would want to invest in real estate business especially those in the house flippers.
Bridge loans do not grant loans to applicants according to their creditworthiness. The financial institutions regularly turn down candidates who have, in the past, defaulted payment. Also, the collateral for ones loan should be close in value to the credit applied for. But, hard money lenders can use after repair value for the property to determine the credibility of the loan. This is an advantage as it does not lock anyone out.
Although you would require some collateral for your lending, the private lenders do not usually put a lot of effort in investigating the actual value of the property. As opposed to conventional lending institutions, the clients have room for negotiation. He is allowed to use the property that requires funding as the collateral. In some occasion, an individual is authorized to use his personal assets as security for his credit.
Since this type of lending is not restricted by the government's underwriting guideline, it is flexible. The customers are allowed to negotiate terms that would suit them best. As an individual, you are allowed to settle for a repayment schedule that meets your needs. Some fee such as the origination fee can even be eliminated during the underwriting process.
Sometimes, investors require emergency funding for a direct investment or to prevent the stopping of a long term investment. Financial institutions cannot offer assistance due to the time-consuming acquisition process. As opposed to these banks which take months before a client gets his loan, bridge loan only takes a matter of weeks at most for your credit to be ready. This is a plus for real estate investor who will lose out in the event of any delay.
Despite all these advantages, private loans usually attract high-interest rate. The cost of these loans is higher compared to the standard rate. Since it draws a lot of risks through possible default of payment, the interest is usually higher to cater for any loss. The interest rate is also not governed by government regulations.
Also, the repayment period is usually shorter. Therefore, long-term investors are often discouraged since they may fail to repay the loan. Unlike the conventional mortgages which often take years to repay, hard money loans only take a few months.
Despite it being expensive compared to the bank loans, a bridge loan can be helpful in times of emergency. It is also the last resort for individual turned down by mainstream lending institutions.
Bridge loans do not grant loans to applicants according to their creditworthiness. The financial institutions regularly turn down candidates who have, in the past, defaulted payment. Also, the collateral for ones loan should be close in value to the credit applied for. But, hard money lenders can use after repair value for the property to determine the credibility of the loan. This is an advantage as it does not lock anyone out.
Although you would require some collateral for your lending, the private lenders do not usually put a lot of effort in investigating the actual value of the property. As opposed to conventional lending institutions, the clients have room for negotiation. He is allowed to use the property that requires funding as the collateral. In some occasion, an individual is authorized to use his personal assets as security for his credit.
Since this type of lending is not restricted by the government's underwriting guideline, it is flexible. The customers are allowed to negotiate terms that would suit them best. As an individual, you are allowed to settle for a repayment schedule that meets your needs. Some fee such as the origination fee can even be eliminated during the underwriting process.
Sometimes, investors require emergency funding for a direct investment or to prevent the stopping of a long term investment. Financial institutions cannot offer assistance due to the time-consuming acquisition process. As opposed to these banks which take months before a client gets his loan, bridge loan only takes a matter of weeks at most for your credit to be ready. This is a plus for real estate investor who will lose out in the event of any delay.
Despite all these advantages, private loans usually attract high-interest rate. The cost of these loans is higher compared to the standard rate. Since it draws a lot of risks through possible default of payment, the interest is usually higher to cater for any loss. The interest rate is also not governed by government regulations.
Also, the repayment period is usually shorter. Therefore, long-term investors are often discouraged since they may fail to repay the loan. Unlike the conventional mortgages which often take years to repay, hard money loans only take a few months.
Despite it being expensive compared to the bank loans, a bridge loan can be helpful in times of emergency. It is also the last resort for individual turned down by mainstream lending institutions.
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