Hard Money Loans – Best Way to Fund Your REI Business

As a real estate investor, it is important to have someone who can back you up financially, especially if you are just starting out in the housing business. One way to obtain funds for your investing business is to approach banks, mortgage companies, and credit unions. But if you’re not qualified to obtain a loan from these lending institutions, don’t fret because there is still someone who’s still willing to help you.

When it comes to securing funds for real estate investing or REI, the loan provide by hard money lenders is the best. Known as a hard money loan or HML, it is one of the most common types of creative financing. Unlike in traditional financing, hard money lenders verify a loan’s eligibility according to the value of the property that serves as the collateral. If the property can attract a good deal, the lenders would likely approve the loan application.

Aside from this, acquiring HMLs has a lot of advantages compared to traditional loans. Listed below are some of them:

- Because HML lenders do not care about a borrower’s credit score, the loan approval time is shorter. You can obtain the funds you need in just a matter of days, not weeks or months.

- You don’t have to produce documents and other credentials, as well as deal with a processing team, which is a common procedure in banks and other conventional lending institutions.

- You can acquire a property without spending a single dollar since there are instances that lenders provide 100% financing on some deals.

- Some HMLs cover a property’s repair cost.

However, one of the downsides of acquiring hard money loans is that HMLs have higher interest rates and origination fees, which are used to process a loan application. But the good news is that interest rates nowadays are relatively lower than in recent years. Because of the stiff competition, many lenders are forced to reduce their rates to attract clients.

Meanwhile, one of the best ways to find hard money lenders is to ask your fellow real estate investors for referrals. Since most of them have experience in working with these lenders, they can give you good leads. Asking settlement attorneys and titles companies for recommendations is a good alternative, too, since they are the ones who prepare loan documents for these individuals.