Hard money loan lenders do not have the traditional way of lending the money to you. Their approach is different as they lend money to you based on collateral security and are not much concerned about your ability to repay the loan amount.
If anything backfires then the hard money lender can always use the collateral to gain their money back. Thus the financial position is not of much importance but the value of the collateral is, when you are trying to acquire a hard money loan.
Hard money loans last from one to five years and are generally short term. The interest rates are higher than the traditional loans. Hard money lending options are great for people who cannot get traditional funding when they absolutely need funds.
They can be acquired more quickly than traditional loans as the lender does not take into consideration your financial position rather focuses on collateral. They will look out for the property you have rather than going nuts about your income, bank statements or credits. Once a relationship is built with the lender the process is quite quick.
Traditional loan agreements are not flexible whereas hard money loan agreements don’t use a standardized underwriting process and rather evaluate each team individually making the process speedier and flexible.
Repayments can be scheduled according to your situation and after the discussion with the lender. The lender is always willing to talk, which is not in the case of a large corporation or Bank who has strict policies regarding lending money.
Collateral is the main factor for the approval of money by hard money lenders. The property’s value is what the lender is interested in. It does not matter if you have a negative credit report. Some lenders don’t even look at them.