Our other blog posts have discussed critical information you should know before going with a hard money loan. But, are hard money loans actually a good idea?
Well let’s break it down. Hard money loans may provide an easy path to fast cash to buy real estate. However they come with much higher costs that could increase your risk of default. A hard money loan is a collateral-based lending. Basically it means that a lender places the most weight on the property when determine if and how much to lend rather than based on your income, assets, or credit payment history.
Hard money loans don’t require much of any documentation of income and credit. There may still be some sort of application that needs to be filled out. With any hard money loan that is offered the process is similar to applying to a regular loan mortgage. Most money lenders will require a credit report, mostly to see if you have any type of lien.
A plus side of hard money lenders is that they aren’t as likely to ask where the money is coming from for your down payment or closing costs. As long as you produce the funds for a down payment and any costs the investor might charge, your loan will be funded. Also, hard money loans aren’t bound by the same mandatory waiting periods required by federal law on regular mortgage loans. If the investor favors the property and you can come up with the money for the down payment and other costs, you will most likely be funded within a matter of days. Every hard money lender is different. Another key perk for hard money loans is that payment may be interest-only.
There are so many great perks for hard money loans. We highly suggest doing your research to find out who is your perfect hard money lender; as always if you have any questions please contact our team at (866) 999-2011 for more information and to find out if you qualify for a hard money loan with our team!