The Pluses and Minuses of Hard Money Real Estate Loans
One of the best ways to secure funding for a real estate project is to qualify for a bank loan. But if you don’t want to wait for a long processing period, you can always get hard money real estate loans. Instead of being offered by conventional lenders such as banks, mortgage companies, and credit unions, these non-traditional financing are being provided by private investors and small-time lenders. To give you a deeper look at hard money loans, here are the advantages of using such a type of financing for your real estate deals: 1. Hard money lenders provide funds to the desperate and the needy. They are willing to tread on risky deals and they offer funding to projects that banks and other conventional lenders wouldn’t dare touch. 2. In hard money lending, a person’s credit rating is of no consequence. A borrower can still get hard money even if he or she is nearing bankruptcy, facing a foreclosure, or can’t provide a verifiable source of income. 3. Hard money loans are asset-based. If you’re borrowing money for a property that has a high after repair value and great marketability, you’ll get the funds that you need in no time. 4. Once approved, hard money real estate loans are released immediately. If you borrow money from banks, you’ll have to wait a couple of months or more. But with hard money lenders, you’ll get the results of your loan application in about three days or less. But just like the principles of yin and yang, hard money lending has disadvantages, too. Listed below are some of them: 1. Although hard money lenders are unlike loan sharks who harass their borrowers if the latter fail to make payments on time, they are known for imposing high interest rates that will make traditional borrowers cringe. Hard money loans usually come with interest rates of 12% to 18%. 2. A hard money loan has a smaller loan-to-value ratio. In addition, it has a shorter repayment period. 3. Hard money real estate loans are expensive. Aside from the high interest rates, borrowers are required to pay origination fees, which are used to process a loan application. Before you sign up for the services of lenders of hard money, weigh your options carefully. Meanwhile, if you’re looking for a list of hard money lenders in your area, visit www.RehabHardMoney.com. Disclaimer: Article submitters are solely responsible for the content of their articles. ArtiLib can't be held liable for the contents of the articles. Report Abuse | Browse By Category |
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