Those in the real estate business are familiar with hard money loans. These are short-term loans where one uses their property as collateral to acquire a loan from hard money lenders. However, traditional lenders such as banks do not offer hard money loans because these financial institutions are not structured to provide such loans. Thus, one can mainly acquire such loans from private individuals, especially those in the real estate business. Furthermore, hard money loans are different from bank loans since they are usually short-term loans lasting for a few months, while bank loans can be long-term and last for years. This blog shall depict three benefits of hard money loans. 

Credit Scores Have Little to No Influence

All banks must evaluate your credit score before approving your loan. Their primary assumption is that each client's credit score depicts their ability to repay the loan. As such, a poor credit score may disqualify you from the loan. However, hard money loans are not based on such a criterion. Hard money lenders care more about your property's value than your credit score. This is because they will give you a loan equivalent to the value of the property you have placed as collateral, including the interest. Ultimately, they may not care that you have had issues with other lenders in the past. 

Loans Are Approved Faster

Another benefit of hard loans is that they are approved faster than bank loans. Banks often take several weeks to approve your loan after application. There are various factors these institutions consider before approving your loan. For instance, they may evaluate your monthly income to determine your financial capability to repay the loan. Such processes take time and will delay the loan. However, hard money lenders do not have a checklist of what they must consider before funding your loan. You will only agree to the loan amount and sign a contract acknowledging the loan has been disbursed and the collateral has been established. 

Few Requirements Are Needed

The process of applying for a loan from a bank is strenuous. Many things are required before the bank approves your loan. For instance, you must provide your personal information, your income statement, and the valuation of your property. Moreover, you must provide a guarantor who will pay the loan if you default and pay for loan insurance. All these requirements may complicate the application process. In contrast, hard money lenders may only ask you for your collateral's valuation. They will investigate and determine if the valuation is accurate before giving you the loan, making the process easy and swift.

For more information, contact hard money lenders near you.