The Benefits of Hard Money Loans
Struggling to secure funding for your next investment property? From purchasing costs to essential renovations, real estate investment requires a significant amount of flexible capital. Many would-be investors are turned away due to strict loan requirements. Discover how hard money loans can help you secure your next investment opportunity.
A traditional bank loan requires you to submit a lengthy application, undergo a credit check and, often, provide a financial history and detailed plan of how you’ll use your financing. These obstacles make it difficult to utilize a traditional loan to snatch up hidden gems and other properties that require renovations.
Hard money loans aren’t based on your credit score, so you’ll enjoy far more freedom and flexibility with your spending. These loans are based on the value of an asset put forward as collateral. This could be the property you’re purchasing, your primary residence or any valuable business equipment or inventory you may have.
Once you receive a hard money loan, the money is yours to use as you see fit. Even if banks may feel like your investment strategy is risky, you can dive into a high-risk, high-reward project with confidence. Your hard money loan may come with a higher interest rate and shorter payment period, but you can refinance after you’ve purchased and renovated the property you’ve selected.
If you know real estate, you know a good deal when you see one. Choose a hard money loan to keep full control of your decision-making process and purchase the property you want. Once you make the renovations you feel will add value to your property, you can either list the property or refinance for a long-term mortgage. Once you’ve gone through the risky part of renovations, banks may be more willing to finance a finished project, particularly if you’ve added value and use to the old building.
Don’t let a low credit score stop you from finding the perfect real estate investment opportunity. There are many reasons your credit score may be too low to become approved for a traditional loan. From a failed previous investment to existing loans or lack of down payment, these obstacles can all be overcome with a hard money loan.
Shop around for a loan that fits your needs. Hard money loans are offered by many banks and financial institutions, so you should find the option that fits your needs, offers the best rates and is offered by a provider you can trust.