Hard money lending is a special process that's based on real estate value rather than someone's credit. It might be the right lending option for you if one of the following situations is present.
Flipping a House
There are a lot of people that flip houses for a living. It can be a good investment, but you first need to have a lot of funds to purchase homes outright or to afford just the down payment. Since you're not planning to live in these properties, a hard loan might be a good choice.
These loans come with very short terms, such as a couple of months. However, you can extend the loan term depending on how house-flipping goes. You'll be able to secure enough funds and use the houses you're flipping as collateral with a lender helping you fund these transactions.
Credit Isn't Ideal
If you don't have good credit but are still looking to fund a real estate transaction, you still have options. Where a lot of home loans are based around credit, hard money loans primarily focus on the value of the property that's being used as collateral. So if you currently have a property that you plan on selling before moving, you can take the proceeds to pay back the hard money loan.
You'll just want to make sure your home's value qualifies for the hard money loan, as well as review the loan's terms. Then you can receive short-term financing without a bunch of problems or headaches.
Want Funds Quickly
There are some real estate transactions that need to happen quickly. A delay could keep you from securing the property, whether it's to live in or for flipping purposes. Either way, you won't have to worry about a long process if you think about going after a hard money loan.
It's a short-term type of loan that isn't that difficult to have processed. A lot of lenders can actually provide funds within a couple of weeks. Then you can take care of pivotal real estate deals before losing out on them because other prospects acted faster.
There are a lot of loans available to fund real estate transactions. If you decide to go with a hard money loan, in particular, the lending process could be a breeze if you have multiple properties. Just make sure you stay responsible and educated as the party receiving funds from these loans.
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