Hard money lenders – A preferred source of finance for potential borrowers

The concept of borrowing from financial institutions and banks is slowly taking a backseat due to the plethora of formalities and conditions required to be fulfilled by the borrower in order to be eligible for borrowing a specific sum. The concept of hard money lending is slowly gaining pace as it helps borrowers to do away with the formalities associated with the conventional form of lending. Many borrowers who haven’t yet explored the arena of private borrowing may not be aware of the concept of hard money lending and the benefits that hard money lenders in Houston provide over other types of lenders.

The primary purpose of borrowing from hard money lenders is the facility of quick approval of loans and applying for money in cases where the application has been rejected by conventional lenders. Apart from that, there are several other reasons for seeking assistance from hard money lenders some of which are mentioned below –

1. Immediate funds to close an escrow

With hard money loans you will receive the borrowed sum immediately upon sanction of the loan application, especially when compared to other forms of financing. This is more beneficial in the case of real-estate investors who need money almost immediately. Whereas, if the investor applies for a conventional loan it would take almost two to three weeks to get the loan amount sanctioned due to the numerous federal regulations associated with it. Direct hard money lenders can get the amount arranged within a matter of days.

1. Arrangements during a recent foreclosure or short sales

A foreclosure or short sales is similar to a red flag for a conventional lender. But hard money lenders are least concerned with such issues as long as the borrower is financially strong. Banks or financial institutions usually require potential borrowers to wait for at least 2 years after encountering a short sale on the record to qualify for a loan application. But hard money lenders only check whether they have adequate reserves and assets to pay off the loan in case of a default.

1. Funding after immediate bankruptcy

A potential borrower who has been recently discharged from bankruptcy will definitely fail to get a loan sanctioned from any bank or financial institution. But a hard money lender will immediately agree to offer loan to such a borrower, despite his poor financial condition. Since, the hard money lender is least bothered about the financial stability of the borrower. Instead, he is concerned with the investment project where is money will be invested and whether the borrowed amount can be recovered from such a project in case the borrower fails to repay the sum.

1. Borrowing in case of an entity

Unless otherwise the borrowing entity is a reputed one with stable performance in the past, it is difficult for a trust, corporation, LLC, non-profit or other entities to obtain a loan through the conventional mode of financing. But hard money lenders agree to provide loan to such entities and they have an individual provide a personal guarantee for such loan. Such type of financing is beneficial for those requiring funds for real estate in a trust, probate or estate.

Conclusion

Hard money lenders Houston provide the means through which potential borrowers can obtain loans from outsiders for their proposed investment plans or repayment needs and get their purpose served. However, both the borrower and the lender must read and understand the terms of such lending before getting into a binding contract so that there is no ambiguity relating to such funding in the future.    

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