Tuesday, January 3, 2017

Hard Money Lenders Seattle As Alternative Creditors

By Raymond Hall

Previously, one could only get a loan from financial institutions such as the banks. The documentation and the process of application are tedious and rather take a long time. These paper works proved to be a disadvantage to people who required a quick financial aid. Hard money lenders Seattle, usually done by private investors, is a good alternative especially for the people who would want to go into real estate industry.

Even though your creditworthiness is tainted from the past, you can qualify as a borrower from the private lenders. These firms only grant loans to persons according to the value of the collateral. In some occasions, they can agree to offer credit according to an after repair value of property. In mainstream banking, they can only extend credit after an active investigation of how you handled your previous borrowings. One should have a clean record with the credit union for him or her to be considered.

Financial institutions usually require valuable properties to act as security for your mortgage. This allows for the covering of losses in the event of default. However logical this is, it locks many people out, especially the house flippers who need finances for low-valued properties. A person can be given a bridge loan despite having a property of low value as security. They usually use the value of the building after repair to determine the feasibility of the collateral. Negotiation by the client is also tolerated.

Since this type of lending is not restricted by the government's underwriting guideline, it is flexible. The customers are allowed to negotiate terms that would suit them best. As an individual, you are allowed to settle for a repayment schedule that meets your needs. Some fee such as the origination fee can even be eliminated during the underwriting process.

The period it takes to process a loan by hard money lenders is relatively shorter compared to banks and underwriters. It takes a bank up to three months to process such credits. This is disadvantageous especially to individuals who would require a quick source of funding. Such people include real estate investor who would want to buy a property whose delay in purchase would lead to losing out. Long-term projects which have deadlines may require such emergency funds to allow for the continuation of such projects.

It is usually costly to acquire a loan from private entities. This is due to high-interest rate such credits attract. Compared to mainstream creditors, the interest rate is relatively higher. Due to absence of regulation that dictates on the interest rate, rates are usually agreed upon during negotiation. The property at hand acts as the benchmark for the determination of the interest rate. The greater the risk, the higher interest.

Also, the repayment period is usually shorter. Therefore, long-term investors are often discouraged since they may fail to repay the loan. Unlike the conventional mortgages which often take years to repay, hard money loans only take a few months.

In conclusion, hard money lending is a good alternative for quick funding. It has enabled individuals not considered creditworthy to receive debts. Apart from the high-interest rate and short repayment period, it is a milestone in the finance industry.

About the Author:

No comments:

Post a Comment