What’s the right borrowing option for you?
There seems to be an endless assortment of money borrowing options out there. From loans to mortgages to lines of credit, navigating this financial world can be confusing and intimidating.
But it doesn’t have to be. With a little research, you too can understand the ins and outs of money loans.
Before you opt for a hard money loan, you should learn a few things about them. Being well prepared and thoroughly researched on a subject can help you avoid pitfalls and sticky situations.
Wondering about the basics of a hard money loan? Read on!
1. It’s a Short Term Loan
A hard money loan may sound scary, but it’s not. It’s just a short-term loan that’s secured by real estate.
In the same vein, a hard money lender isn’t some scary guy who you can only meet with in the shadows. Not at all. A hard money lender is essentially just a private investor.
A hard money lender could be an individual, a group of investors, or even a mortgage broker who uses his own funds. What it isn’t is a bank using money from its depositors.
Before going forward on a money loan like this, just be aware that it’s a loan only meant for a short period of time.
2. It’s Less Hassle
This is one of the main reasons that borrowers opt to go with a hard money loan rather than taking out a mortgage from a bank.
Hard money loans tend to be less of a hassle than the traditional mortgage method. They are easier to get and can thus be acquired more quickly.
However, this accessibility comes with some drawbacks. The loan interest rates on hard money loans tend to be much higher than traditional mortgages. They are usually anywhere from 8% to 12%.
In addition, as stated above, the money is only borrowed for a short period of time. You don’t have a lifetime or several decades to pay it back, as you often do when you take out a mortgage.
The down payment requirements also tend to be different than what most people are used to. This doesn’t have to be a bad thing, just something to be aware of when you’re considering a hard money loan.
Hard money lenders are a bit less choosy, making it easier for people to get a hard money loan.
3. It’s a Good Option
Hard money loans can be an ideal option for certain kinds of people.
For example, if you are someone whose home went into foreclosure after losing your job, it may be difficult for you to convince a bank to lend you money for anything.
Occurrences like that are a major red flag to lending companies, and they’re going to be very hesitant to sign onto anything with you.
Maybe you’re trying to buy a new house that’s within your price range now that you have a new job. Or maybe you found the perfect home at the exact perfect price for you, but you have to act fast and don’t have time to wait around for the bank’s decision.
If these kinds of situations apply to you, a hard money loan may be just the thing you need. You have the money now and can handle the loan you want to take out.
Still, a bank or other traditional lending company might refuse to give you the time of day. This is not the case with hard money lenders. You actually have a chance at scoring your dream house if you go with this option.
4. It’s Quick
This is another major reason that borrowers opt for this type of loan.
The process is not just less of a hassle–it’s also much quicker. Did you know that if you borrow from a hard money lender, you could be funded in as little as 4 days?
Sounds too good to be true, but it isn’t! After the final documents have been signed, received, and finalized, the money will be available to you quite quickly.
Whether you need quick money for a quick sale of an investment property that’s going hot on the market or are simply ready to purchase your dream home, hard money lending may be the perfect alternative for you.
The entire process can happen much more quickly than a traditional lending and mortgaging process. Ask your loan broker for details.
5. It Can be the Best Option
Hard money loans can be the preferred option for some people. Not everyone opts for this kind of loan solely because they have no other option.
On the contrary, this kind of loan might be ideal for someone who is not comfortable parting with a large chunk of change up front. When purchasing real estate, going with a hard money lender instead can be a good way to avoid traditional financing options.
There is a different process entirely for the down payments and interest rates when it comes to hard money loans. People like house flippers, real estate developers, and builders and contractors are commonly found opting for this type of loan.
It simply fits the best with what they’re trying to achieve. The value of the property, rather than the creditworthiness of the borrower, is what matters most to a hard money lender.
Need a Money Loan?
You’ve come to the right place!
We launched our hard money loan business over ten years ago, back in 2007. Since then, we have grown to become one of the trusted names in the money lending world.
Our goal is to provide opportunities for people to meet their financial goals through alternative financing options — something different from the traditional method of money lending.
From private money to commercial loans, and even fix and flip loans in some states, we have the right option for you and your money borrowing needs.
Contact us today if you have questions about money lending, financial matters, or what loan options may be right for you. We can help you figure out the financial solutions that will best fit your needs.