Get Things Straight: What You Should Know About Hard Money Loans

Mortgage and Loan Keys on KeyboardYou may have heard the term hard money lending, but are unsure of what it really is. Briefly, hard money loans are a type of short-term financing and asset-based loans with higher rates than conventional mortgages. These are a great choice for developing real estate and flipping houses or those who don’t have an excellent credit but needed financing for a renovation project.

Hard money lenders in Miami note that despite its obvious benefits and uses, many are still hesitant in getting this type of loan. If this is the same for you, this might be due to the myths and misconceptions associated with hard money lending. It is time to get things straight by addressing these common concerns about hard money loans.

Are hard money lenders really loan sharks?

Those who give out hard money loans are mostly experienced and successful business people who are willing to help private investors. Do take note that such lenders do not simply offer financing, unless they think that the investment will produce good returns. It is still important, however, to do some research to find reputable lenders and avoid illegitimate ones whose goal is to take the property away from you.

Are these loans the last resort for desperate borrowers?

While these loans have lenient requirements than banks and conventional lenders, they are not for people who cannot borrow anywhere else. In fact, many of those who apply for hard money loans are successful individuals or business. They usually turn to hard money to immediately finance an investment opportunity that banks and other lenders don’t usually approve of. Hard money lenders can only complete the application in ten days or less, while for banks, it may take several weeks or months.

Do hard money loans cost too much?

Sure, these loans have higher rates than traditional financing, but their benefits outweigh the risks. If you, for instance, want to get the loan within a few days to proceed with buying and flipping a house, this type of financing will work best for you. This can also let you sell the house a lot faster, making it a more cost-effective option than traditional financing.

It is not really a bad idea to get a hard money loan to finance your investment. Just be sure to do your homework and work with legitimate lenders. You should also understand the terms and conditions of the loan before signing anything.

 

Posted on by George Cummins in Money Times

Comments are closed.