Real Estate Investment Guide: Hard Money Loan Breakdown
This hard money loan breakdown will help you understand how easy it is to get a hard money loan for your real estate investments. Why should you choose hard money loans? Because hard money loans are great for real estate investors since they are flexible, short-term, and fast. They are perfect for fix-and-flip projects whether it be commercial, residential, or luxury property.
The hard money loan definition is a short-term loan for individuals purchasing residential or commercial real estate. These individual generally flip the properties in order to make a profit. Because the hard money loan process is significantly shorter than that of a traditional loan, investors use hard money to acquire investment properties quickly. Hard money lenders to do not use the same strict set of criteria traditional lenders use when extending credit to borrowers. Instead, hard money lenders are only concerned with the value of the property which will serve as collateral.
Considering the high interest rates, why would an investor consider financing real estate investments with a hard money loan? Investors generally use hard money loans because their credit is not taken into consideration. Investors with low credit scores can easily be approved for a hard money loan. Also, in many cases, banks will not loan money to investors with house-flip project and they do not give out short-term loans. Even if an individual walks into a bank with a structured and profitable plan, they still may not be approved for a loan. Also in the case of hard money loans, borrowers are able to get their funding in a matter of days and they can invest quickly.
If you are a real estate investor, hard money lenders are interested in working with you. You need a loan and they want to give it you. It’s a win/win because you need a loan quickly with flexible terms and hard money lenders are looking for experienced real estate investors who need financing. Also, when you offer to purchase a property with private-cash funds, it’s much more likely that you will get the property.
While the stock market is volatile and unpredictable, investing in real estate is a much stable and secure route to take. Unlike traditional lenders, hard money lenders can offer real estate investors partnership and communication. When you are flipping a house, financing isn’t the only thing you need. You want a lender who values open, two-way communication. Traditional lenders may have strict regulations for potential borrowers but hard money lenders work with the borrower to find a loan that works for them. Communication, integrity, and timeliness are important when it comes to finding a lender. Finding an alternative lender to handle these investments doesn’t have to be difficult. Find out more about HML Investments here.