There are many different ways to go about financing real estate investments but hard money loans may be your best option. First of all, what is a hard money loan? A hard money loans 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.
How Hard Money Loans Work
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. Also, hard money lenders are not as interested in the borrower’s credit score as the value of the property. This is because the property serves as collateral.
It is also important to keep in mind that there is usually a conservative loan-to-value ratio which provides the lender with security in the event of a default. Hard money loans also have high interest rates. This is because it is easy to get a hard money loan compared to a traditional bank loan.
Why You Should Consider Hard Money Loans
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 can still leave empty-handed. 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.
Hard Money Lenders Help When Banks Don’t
Because hard money loans are convenient, flexible, and fast, the interest rates are generally high. But besides all of the benefits listed above, hard money lenders are experienced and can help you with your investments and work with you to find a loan that works for you. When you are investing in real estate, you’re not just looking for financing, you are looking for a lender who values open, two-way communication. Some important Trust Deed Investment Information you’ll need are the basics of finding a great MLB. Communication, integrity, and timeliness is most important. Finding an alternative lender to handle these investments doesn’t have to be difficult. Find out more about HML Investments here.