Did you know that only 20% of American consumers have credit scores of 800 and above?
Different institutions categorize credit scores based on their own factors, but a score range above 630 is typically considered good. The higher your credit score, the higher the chances of gaining access to loans with the best rates.
What if you can’t secure a mortgage because of your credit score? You might qualify for a private money mortgage loan. Keep reading to learn the five benefits of this type of loan.
1. Flexible Loan Terms
Banks have lending guidelines and requirements that impact everyone that applies. These cumbersome institutions take a one size fits all approach to loan applications.
Compared to a conventional loan, a private money mortgage loan offers flexible loan terms. To get a hard money loan, you need to consider the different variables.
Compare interest rates, application requirements, loan fees, etc. You can negotiate all of these factors if you choose to work with a private lender instead of a conventional lender. You can choose the terms that favor you the best.
You can shop around from lender to lender to find some of the best options in the market.
2. Fewer Requirements
There are a lot of requirements involved when you choose to get a mortgage through a conventional lender. Private lenders, on the other hand, have fewer requirements.
You’ll want to have sufficient equity, enough cash for monthly payments, and a strong backup plan. A big benefit of using a private money mortgage loan is that past mistakes won’t put you at risk of denial.
Foreclosures, short sales, bankruptcies, and loan modifications can all put you on the back burner for years in the eyes of conventional lenders. Private lenders are focused on the down payment and the property itself, not past mistakes.
Additionally, credit scores don’t count. Instead of using your credit score for approval, you can use the equity you have in your current home to help you fund a new home purchase.
With fewer requirements, you have a better chance of getting your loan approved. Lenders with longer requirement lists are known to decline many loan applications.
Private lenders don’t keep borrowers away by making it harder for them to qualify. Because there are fewer requirements, the loan process is simplified.
3. Full Control Over the Process
Private money means receiving real estate loan terms that depend on you. You’ll have control over the process to some extent. This means you have the upper hand on each decision you make without having to compromise.
You and the lender aren’t subject to strict policies. The lender decides a suitable interest rate to charge, but you can negotiate these terms.
Private lenders don’t have to worry about lending out a huge chunk of cash because they have collateral to fall back on with a private money loan. As a borrower, this will give you the incentive to pay back your loan on time.
When you borrow money from a bank, you are likely to run into hidden fees. Take full control over the process of working with a private lender by avoiding hidden fees.
All costs and repayment requirements for a private money mortgage loan are laid out plainly when you work with a reputable hard money lender.
4. Faster Approval and Funding
If you need to secure a loan before your home buy falls through, a private money mortgage loan is the way to go.
Private lenders are the best option when you need quick loan approval and funding. In certain instances, it can take as little as a few weeks to have your loan approved. After that, it only takes a few hours to get the money.
When you fill out your application, ensure everything is correct to make the process as efficient as possible. Get your home appraisal scheduled as soon as possible as well to know exactly how much you’ll need to borrow to afford a home.
Private lenders take your equity, property, down payment, and loan history into consideration when looking at your loan application. They may also look into cash reserves to see if you can make the monthly loan payment.
If all of these factors are reasonable to the private lender, you don’t have to wait long to receive the money.
5. Fewer Papers to Sign
If you’ve applied for any type of bank loan in the past, you know that you have to fill out mountains of paperwork before applying for a loan. Reading and signing all of these documents is tedious and time-consuming.
When you sign reams of paperwork through a bank, you commit to paying whatever fees the bank adds. If you don’t thoroughly read your application paperwork, you never know what you are agreeing to.
When you need money fast, time is of the essence, and you don’t want to spend it signing dozens of papers.
Private money lenders can streamline the process of applying for a loan. You have fewer papers to sign and can get your money faster with less hassle.
Do You Need a Private Money Mortgage Loan?
If you want to buy a home or invest in real estate property, obtaining a conventional loan won’t be easy. Institutions that offer these types of loans have rigid requirements that are difficult for individuals to be eligible for.
Applying for a private money mortgage loan is a great alternative to traditional lending.
When you work with private money lenders, you benefit from flexible loan terms, fewer requirements, full control over the loan process, faster approval and funding, and fewer documents to sign.
Let us partner with you! Contact us today to learn more about our hard money loan products.