You may have heard of hard money loans if you’re in the market for a home loan or a commercial real estate (CRE) loan. But do you know hard money loans are the easier loan option when trying to qualify for than traditional financing? At Benworth Capital, we understand that getting a loan can be a complex and stressful process. Therefore, we strive to make the loan application process as smooth and efficient as possible so you can quickly get the funding you need.
What Is a Hard Money Loan?
A hard money loan is a short-term loan secured by real estate and backed by the property’s value. Hard money loans are typically used for financing commercial real estate or investment properties and can be approved much faster than traditional bank loans. Unlike traditional bank loans, hard money loans are not based on your credit score or income. Instead, the loan is based on the value of the property you will use as collateral. This makes it easier to qualify for and also offers more flexibility than traditional financing.
How to Qualify for a Hard Money Loan
Qualifying for a hard money loan is much a easier loan option than traditional financing. The process is quicker and simpler, as lenders look at the value of the collateral more than they look at the borrower’s credit score. Generally, hard money loans require a minimum credit score of 600, but this can vary depending on the lender. At Benworth, we don’t have any minimum credit score, so there’s no need to be concerned if you have low or no credit.
It’s also important to note that lenders often don’t look at income, employment history, or bank statements when evaluating an application. The most important factor for hard money lenders is the collateral itself. This drastically cuts down the time it takes to get funded since you’re not going back and forth with all kinds of documentation.
The loan-to-value (LTV) ratio must also be considered when applying for a hard money loan. LTV ratio is calculated by dividing the loan amount by the appraised value of the collateral. For example, if you are applying for a loan with $100,000 in collateral and the appraised value of the collateral is $150,000, then your LTV ratio would be 66.67%. Generally speaking, the lower the LTV ratio, the better your chances of being approved for a hard money loan.
The Benefits of a Hard Money Loan
Hard money loans offer some benefits compared to traditional financing. These loans are often quicker and easier to qualify for and can provide borrowers with the funds they need in as little as a few days. Because these loans are based on the value of the collateral instead of the borrower’s creditworthiness, they are less risky for lenders.
Additionally, because hard money loans are typically short-term loans, they can help borrowers access capital for their projects without having to take on long-term debt, which helps to save borrowers money on interest costs. The other benefit is that hard money lenders are often more flexible and willing to work with borrowers than traditional lenders. This means it may be easier to get a loan approved, even if you don’t meet all of the requirements or have a spotty credit history. That can be especially helpful for those who have trouble obtaining traditional financing due to their unique financial situation.
How to Get Started with a Hard Money Loan from Benworth
Getting a hard money loan from Benworth is straightforward. First, you must fill out the online loan application or contact them by phone. Next, you will need to provide some basic documents such as proof of income, bank statements, tax returns, and the details of the property you are looking to purchase or refinance. Once your loan application is approved, you can expect to receive your funds within a few days to a few weeks. The benefits of obtaining a hard money loan from Benworth include the following:
• Low closing costs
• Flexible repayment options
• Fast approvals
• Low-interest rates
• Flexible loan terms
Are you searching for a rapid and hassle-free solution for your home or commercial real estate financing needs? Look no further than Benworth Capital. We are ready to facilitate your funding journey with competitive rates and flexible terms.