If you have never applied for a hard money loan before, you may be feeling a little lost when it comes to doing so. After all, what in the world is a hard money loan? If you look on the internet to find answers to your question, you could spend hours trying to figure out what is fact and what is fiction. Rather than doing that, we have compiled a list of nine of the most important things you should know about hard money loans as well as acquiring one from a local lender. Continue reading below to get the facts you have been searching for.
Complex deals can occur when you are attempting to get a hard money loan.
When your deal seems to be a little more high risk and therefore is passed up by a bank or a national lender, you may be able to still get a hard money lender to consider your loan request. Even when you have been rejected by others, it doesn’t mean you will be rejected by all.
Hard money loans – It’s not about the cost!.
When opportunity knocks, many investors don’t have the time required by banks to take advantage of the deal. Private lenders earn their money by being ready to fund loans quickly and by being able to look at the whole deal, without requiring anywhere near the detailed documentation endlessly required by banks and others, especially your expected profits to see their way clear to lending on your deal.
Cash reserves are imperative – You must have skin in the game!.
Private lenders, like those at Abbey Mortgage & Investments, want to know that you both have cash in the deal and will be able to make monthly payments on your loan even if there happen to be problems with the deal later on.
There are many ways you can use hard money loans.
You can get a hard money loan for a number of reasons. Whether you need to get money for tenant improvements, rehab financing, or cash-out loans, a hard money loan may be the right choice for you. Private lenders don’t look at your deal and your finances the same as those providing conventional financing as well.
Hard money loans don’t have to take forever.
While you may have to wait several months for approval from a national lender, hard money loans from private lenders normally take between one and two weeks for funding to be provided. If you have all of your application materials filled out and ready to hand over at the beginning of the process, you will likely be able to make the the turnaround time even shorter.
Hard money lenders can be very flexible.
Private lenders have the choice to be less strict when it comes to the loans they choose to provide. They can also adjust the structure of the loan so that it fits your personal needs far more than a national lender would be able to.
Hard money loans allow for you to make cash offers.
Once you and your hard money lender have developed a relationship, you can most likely get the funding in cash that you will need to take full advantage of any potential real estate investments that may become available in your area.
For the most part hard money loans are short-term and require interest only payments.
You can free up your cash flow for other investments, no problem!
Private lenders often value character over credit.
If you are afraid that your loan will be rejected just based off of your credit score, a hard money lender may be the right choice for you. As long as you have an explanation as to why your credit isn’t in tip-top shape, a hard money lender will likely still consider loaning you the money.
For more information regarding hard money loans, contact Northglenn’s most trusted private lenders at Abbey Mortgage and Investments.