Sometimes, banks can be hesitant to give loans to real estate dealers, especially when the property in question is in bad condition. In such a case, acquiring hard money loans becomes a viable option for real estate investors to get funds.
Definition of Hard Money Loans
Hard money refers to the funds obtained by a borrower from a lender. The terms and conditions of such loans differ depending on the parties involved and the specific contract. After receiving this money, the borrower is supposed to make monthly payments to the lender until the entire loan is paid back. However, most lenders request an up-front, one-time fee from the borrower for loan processing. Private investors and investor groups are the two primary lenders of such loans.
Pros of Hard Money Loans
The property in question acts as collateral, and therefore, hard money lenders are not interested in the borrower’s credit score or how much debt they have. Additionally, the processing of these loans is fast because the borrower is dealing with a single person or a small lending group.
Ideal for Starters
Using these loans when starting can help you buy a property with little or no money from your pocket. You can get a line of credit with lower interest from a bank once you are an established investor.
Possibility to Borrow More
Unlike the banks, hard money lenders can give you 100% of the property’s price without any down payments. All you must cater to is the up-front fee and the monthly payments until you pay off the debt completely.
The lender will be willing to work with you in the future, increase your limit, and reduce the loan processing duration, among others, as long as you have been consistently loyal to the contract’s terms. Real estate is a lucrative investment, but it can be hard to get financing from the bank. Hard money loans are ideal because they are processed fast, although they may have higher interest. If you want to get quality business funding, be sure to contact Rushview Commercial Funding today.