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If you are planning to make a real estate investment and have not enough money, you might be thinking of how to manage the finance for your purchase. Obviously, you will look for several financing methods that can help you to get the needed money. There are two options – either you will go for a hard money loan or a conventional loan. Many investors find it difficult to make a right decision. Through this article, you will learn the differences between these two types of loans and choose the perfect loan type.

Hard Money Loans

Hard Money Loans

Loan Approval Time

Conventional loans take months in the complete loan approval process, a very long waiting time. It is really hard for investor to wait for such a long time as his desired property may get sold to someone else or can delay his project. On the other hand, hard money loan speed is days to a week. It means if you are in a hurry for real estate investment or get stuck due to the shortage of finance, hard money loans would be the best decision for you.

Loan Amount

When investing in big real estate project, your needed funds would be bigger. Banks do not provide higher loan. Also, you cannot take more than 2 conventional loans at a time. So, how would you manage your finance for investment? In this situation hard money loans would be your answer. The lenders provide higher loan amount as compared to conventional loans.

Multiple Loan Types

Many investors prefer hard money loan for repair and renovation purpose. Such short term loan is easy to repay and enables investor to close the transaction faster. Using fix and flip loan, you can renovate your property and sell it at the higher profit. You cannot find any such type of loan in the list of conventional loans as banks do not want to take risk in giving large amount of money for the short time period.

Interest rate

As hard money loans are available for short term, therefore, hard money lenders charge higher interest rate on the loan amount. Investors who cannot get big funds from banks or who do not want to wait for months for loan approval or who do not interested in repaying for several years, usually choose to pay hard money higher rates to avoid any kind of distress or delay in their finance.

Income Proof & Credit Score

You are not eligible for loan from banks if you do not have proof of income, good credit history etc. Banks ask borrower to submit document showing stable income and consider if borrower is able enough to repay the loan after its personal or professional expenses or not. Such constraints do not come under hard money loans. Hard money lenders never ask for your credit or income proof excluding collateral.

If you are thinking how to get hard money loans, LendMe will help you to get your desired loan with great ease and comfort. The experts are always ready to assist clients in each and every step of the entire loan process.

Do not miss the chance to select the best option.

 

Hard Money Loans vs. Conventional Loans