Hard Money Loans: A House Flipping Financing Option
When it comes to house flipping financing, hard money loans are a great tool. The hard money loan definition is a short-term loan for individuals purchasing residential or commercial real estate. Hard money loans give flippers cash for home purchases and property development with about a year to repay.
Since the interest rates for hard money loans are higher than traditional loans, hard money loans are generally for a short period of time. Since traditional lenders have strict regulations when it comes to lending, hard money lenders provide individuals with financing for their real estate investments.
Hard money lenders play a vital role in the financing of all kinds of real estate investments, especially house-flipping. If the interest rates are so much higher than traditional loans, why do real estate use private money loans to finance their investments? According to House Flipping HQ, here’s why real estate investors choose hard money loans:
- Can give you a quicker loan quote
- Can fund a loan much faster
- Don’t always require third party appraisals
- Make loans on distressed homes that need rehab. Many banks won’t touch
this type of property
- Rely heavily on the value of the property. Banks typically rely heavily on the
- Have much shorter approval process, less red tape, and less paperwork
- Don’t have maximum exposure limits to one borrower
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.