Hard money loans may sound intimidating but they can actually be beneficial to both borrower and lender. The borrower gets money to fund their project, and the lender gets a return on their investment. However, there are many other perks that hard money, or private capital, loans can give you as a borrower:

1. Fast approval: Private lenders approve loans in a matter of weeks or days, rather than the months that a bank lender can take.
2. Flexible payment schedule: Private lenders have the freedom and the flexibility to design a customized payment schedule that works for your project. This can even include creating an interest reserve to cover the interest-only payments until the loan comes due.
3. Flexible prepayment penalties: Although banks will often charge penalties if you pay a loan off early, private lenders are much more willing to accept an early payment without penalizing you for it. They are also often able to grant extensions of six months to a year if you need to hold on to the property for longer.
4. Fewer requirements: Private lenders care less about credit scores and your financials and more about the property that secures the loan. The main requirement that most private lenders will make is that you have some skin in the game, so you should not expect to receive 100% financing from a private lender.
5. Negotiation bonus: A hard money loan funds faster and with less chance of the delays or loss of financing that come along with bank loans. This can make an offer financed with hard money more appealing to a seller than other bank-financed bids and could even help you negotiate a lower purchase price in exchange for a quicker closing.
6. Expert advice: Private lenders don’t just approve loans; they want to fund successful projects and help their borrowers avoid pitfalls. Unlike a bank lender that just wants to check the boxes on a form, a private lender wants to make sure that the project they invest in is profitable, so they bring their considerable experience to every project they consider financing. If a private lender rejects your loan request, ask them what it is that made them walk away and whether there is something you can do about it, or if it’s just a bad deal.

These are just a few of the perks that come with borrowing from a private capital lender. Private capital lenders can also provide creativity and less red tape in the lending process, and they can help you leverage assets you already own to buy additional properties with cash-out refinancing loans. Talk to your local private capital lender today to find out how you can benefit from their hard money loan programs. For more information about the loan programs offered by Montegra, contact us at loans@montegra.com.