Hard money lenders have to sell their services just like any other business. They do so by emphasizing their strong points. Among those strong points is speed. Simply put, hard money lenders can work a lot more quickly than banks and credit unions. It is amazing how fast they can put loans together when they are motivated to do so.
That may lead you to ask, “how fast can I get a hard money loan for property?” That depends on a lot of factors. It depends on the property you want to buy, how much money you have to put down, and where you go to get a loan.
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Hard Money Isn’t Bank Money
Obtaining a hard money loan for property means going to a specialized hard money lender. Going to a bank or credit union is not going to help you. Why? Because hard money isn’t bank money. It comes from private investors and licensed lending companies whose funds are not derived from customer deposits.
This is not a bad thing. Banks and credit unions are required to follow a long list of criteria established under federal and state law. They are required to leave no stone unturned in determining a borrower’s ability to repay. Everything from employment history to credit score have to be looked at.
Hard money loans can be obtained faster because lenders do not have to jump through so many hoops. In fact, they rarely do. They base approval decisions on assets. When real estate is being acquired, the asset they look at is the property itself.
The Asset as Collateral
Lender approval is generally faster with a hard money lender because the asset in question is being used as collateral. While a bank underwriter may spend weeks looking through a borrower’s financial records, a hard money lender only needs a few hours to appraise the desired real estate. That property will secure the loan if its value is high enough.
Actium Partners, a Salt Lake City, UT hard money lender, says some lenders in the industry can fund loans in as little as 24 hours. Actium has done just that. There have been several instances in which they have sent a representative to value a piece of property even while loan documents were being drawn up. Once they got the word from the representative to move ahead, funding the loan didn’t take long.
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Speeding Up the Approval Process
Of course, borrowers can speed up the approval process by putting together everything the lender needs before applying. What does that mean? Imagine you are buying a piece of investment property. You need documentation on the property itself. You also have to furnish the lender with certain personal information. The lender may ask for proof of down payment source and any other information you can provide on the value of the property.
Compared to applying for a mortgage or a small business loan, the documentation required for hard money is significantly less. It is fairly easy to get all your documents together before you apply. If you don’t do so however, approval could be delayed while you supply the lender with whatever they need.
It is possible to get a hard money loan for property within 24 hours. However, 3-to-5 business days is about average. Unlike banks and credit unions, which often need several weeks, if not months, to close, hard money lenders can fund projects in under a week. It is because their approval process and lending criteria are built for faster results. Indeed, speedy approval is a signature of hard money lending.
