If you want small funding for your real estate project or to buy a property, you can go for hard money. Hard money equity loans are a type of real estate financing that allows you to borrow money against the value of your property. This can be useful when you need extra cash quickly, especially if you are in a situation where traditional financing isn't available or won't be approved by the bank.
There are many benefits for you if you opt for hard money loan approval. These 4 equity loan benefits are listed below:
What Are The Benefits Of Hard Money Equity Loans?
1. Less Wait Time
A hard money equity loan is a good option for people who need quick funding. One of the main benefits of this loan is that it can be approved in weeks—and sometimes even days! In contrast, traditional financing can take months to process. If you need funds right away to close on your property or fund renovations, then a hard money equity loan could be great for you.
2. Less Documentation
Hard money loans are less stringent in their documentation requirements. This means that you don't need to provide as much evidence of your ability to pay the loan back or even show that you can make payments at all.
Hard money lenders will often lend out money with no income verification at all. Suppose a borrower is self-employed or has other sources of income (like rent). In that case, they can get approved for a hard money loan without proving they will have enough income after making their monthly payments on the property purchase. In addition, there are generally no minimum FICO score requirements for getting approved for a hard money loan. If the lender thinks there is enough equity in the home and has confidence in your ability to repay them their principal plus interest over time, then they are very likely willing to fund your purchase!
3. Property As Collateral
With a hard money loan, the property is used as collateral. Hard money lenders are not looking for borrowers with stellar credit scores and long-term employment histories; they are looking for real estate holdings that can be used as security.
If you need funding for a commercial or residential property, you will be able to get it quickly with a hard money lender. The lender will take a first lien position on the property.
If you don't pay back the loan, they can foreclose on your property and sell it—and then use whatever profits they make from this sale to pay off their debts.
You should note that while real estate holdings secure these loans, they don't require any credit check or income documentation; instead, these loans focus purely on whether or not there is sufficient equity in the property being offered as collateral (i.e., does this house or apartment have enough value relative to its outstanding debt?).
4. More Flexibility
Hard money loans are more flexible than traditional financing. For example, with a hard money loan, you can make property changes without getting approval from your lender. This is especially helpful for investors who want to renovate or improve their investment properties before finding a buyer.
With traditional financing, the lender will typically require that you secure a buyer before approving any renovations or improvements because they don't want the property value to go down after they have already made their loan. But with hard money lenders (who aren't afraid of risk), they are happy letting you spend some money improving your property as long as it doesn't exceed its value by too much—and if all goes well, they will be able to sell it at an increased price!
Loan Leverage
The benefits of hard money equity loans are straightforward. If you are looking to buy or refinance a property and have few options, consider a hard money loan as an alternative. The best part is that these loans don't require personal credit checks! They can be approved quickly, and the funds will be deposited directly into your account within 48 hours.