Traditional banks usually request much detailed documentation from the borrower in order to approve a loan. This documentation needs to be properly translated if in a foreign language and must all be provided to the lender for review several weeks ahead of the intended closing. Bank lenders will also have asset, income and other requirements that the borrower must meet in order to receive such a loan. The entire process may take up to two or more months to complete. Many times borrowers don’t have readily available documentation to support these requirements or prefer not to provide too much private information on their finances and personal assets. Many buyers just don’t want to wait long to purchase their new homes.

For buyers who can afford a significant down payment and who would like to get a loan approved within just days and without the need to present much documentation, a mortgage from a private lender may be the right alternative. These hard money loans command higher than normal rates (around 10%) but are expeditiously processed and approved. Other than the rate, these loans can have the same other terms such as amount, maturity and amortization schedules as traditional loans along with the great advantage that they may be considered like cash when presenting an offer. This flexibility allows the buyer to better negotiate other terms of the purchase such as price and closing date.

These loans are also a great solution in situations where the buyer has part of the funds of a cash purchase tied up and would require a temporary bridge loan to complete the purchase. Since most of these private lender loans don’t have prepayment penalties, the buyer can always pay off the loan when he is ready or when he chooses to refinance the loan using other traditional means.

For more information on these private loans please contact our partners at A&D Financial Corp. who specialize in these instruments and can customize a proposal according to your needs.