When it comes to investing in commercial properties, people often come across the popular financing option called a hard-money loan. These are short-term loans often processed by individual lenders or private financing firms. Unlike traditional loan plans, these loans are not provided by government banks. In terms of collateral, the hard money lenders Atlanta GA accept property or an asset from the loanees. It is the quickest and, perhaps, the ultimate option for commercial borrowers after having their loan or mortgage applications denied. Some people even choose this as an instant financing option to avoid the lengthy approval process.
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How Are Hard Money Loans Processed?
When accepting a borrower for a hard money loan, the lender considers the price of the asset being purchased. In general, the process will be considerably less rigorous than with a standard loan, although the lender may quickly look at the credit or funds. This speeds up the process, allowing borrowers to receive their funds in days rather than weeks or months. Hard money lenders often ask for higher-than-average down payments, and they often charge high-interest rates (though this isn’t always the case). Hard money loans often come with short repayment terms—just a few years. Compared to that, standard loans often have periods of 15 to 30 years.
Uses of Hard Money Loans
The most common reasons why people look for hard money lenders Atlanta GA, instead of going for standard loans are:
Hard money loans can be used by real estate investors who make money by buying low-cost houses that need work, performing value-enhancing repairs and renovations, and then selling the properties for a profit. Professional flippers usually prefer quick forms of funding because these projects typically take place quickly. Meanwhile, since house flippers usually try to resell the property within a brief span of time—usually less than a year—they avoid the protracted loan term of a standard mortgage.
Buying Investment Property
For those who wish to invest in rental property but aren’t eligible for standard financing, a hard money loan often turns out to be the best option. This approach can be handy if the credit history blocks a regular loan approval or if one needs a larger loan amount than an ordinary lender can provide.
Buying Commercial Property
Similarly, to this, a business owner who is unable to apply for standard financing can apply for a hard money loan to cover the acquisition of commercial real estate. Hard money loans can be valuable for businessmen buying a one-of-a-kind property that does not qualify for standard financing.
Hard money lenders Atlanta GA are typically private investors or firms that specialize in this kind of lending. The local bank does not offer options for hard money loans. Hard money lenders may not comply with the same rules as standard to conforming loan lenders. Because of this, hard money lenders generally have the freedom to set their own requirements for their clients’ credit scores or debt-to-income ratios.