Hard Money Lender or Traditional Bank Lender

Where is the best place to get Money! When it comes to getting a loan for a real estate project, there are two main types of lenders you can go with: hard money or traditional bank. Lets compare and contrast the two so that you can make an informed decision about which is best for you.

What is a Hard Money Lender?

A hard money lender is a private individual or company offering loans to real estate investors based on the property rather than the borrower’s creditworthiness. Hard money loans are typically short-term loans, with terms of 12-24 months, and are secured by the investment property. They carry a higher interest rate between 8% -14% for the typical loan however, they require minimum paperwork, credit scores and experience for the investors to have to get the loan.

What is a Traditional Bank Lender?

A traditional bank lender is a bank, credit union, or other FDIC insured financial institution that offers loans to borrowers based on their creditworthiness. Traditional loans are typically long-term, with terms of 5-30 years, secured by the borrower’s personal assets, requires higher credit scores, and in many cases some experience.

So, Which is Better?

It depends on your situation. However, here are some things to consider:

Getting a loan from a traditional lender maybe very difficult if you have bad credit, no credit, and no experience. However, hard money lenders will often lend to borrowers with relatively bad credit if a property secures the loan.

Hard money loans are typically much more expensive than traditional loans, with interest rates of 8-14%. However, hard money loans are often easier to qualify for than traditional loans.

Hard money loans are typically much shorter in term than traditional loans, so you will need to be able to repay the loan in a relatively short period.

If you are flipping a property or need the money quickly, hard money loans can be an excellent option, as they can be funded in as little as 7-14 days. Traditional loans can take 30-60 days or longer to fund, with a lot of paperwork required for approval.

Why Hard Money Loans are the Best Option

Hard money loans help real estate investors grow their businesses by giving them the capital they need to purchase properties quickly. In addition, they allow them to leverage their equity to get the best return on investment. If you are a real estate investor, hard money loans can be a great tool to help you grow your business.

Triton is a direct hard money lender offering nationwide loans to real estate investors and home builders. We have various loan types, including:

• Fix and Flip Loans: Financing options with no interest and low monthly payments are available. We make applying easy, and you can close in as little as ten days. Plus, there is no penalty for prepaying your loan!
• New Construction Program: Rates as low as 5.5% available for new customers, No payments for 18 months and no monthly transaction requirements, 100 percent of construction costs reimbursed up to $1 million in outstanding liabilities, minimal credit score required.
• Rental Financing Program: With our extremely competitive interest rates and 100% financing option, plus 24-month terms, who could ask for more? And with up to 90% After Repair Value available on some loans, how could you not find the perfect fit?

Now that you know what each entails, you’re perfectly positioned to choose between a hard money lender or traditional bank lender. Ready to get started? Why wait? Get pre-approved today!