A Complete Guide on Hard Money Loans
Hard money loan is a type of loan that the investor will take out from a private lender allowing them to purchase and develop a house that they will eventually flip. Essentially, this type of fix and flip loan is a lot easier to acquire since they do not come with stern requirements like bank loans. However, they normally come with a higher interest rate. The hard money lender can be a service or a person that borrow cash from the investors. They will use this money in order to lend to flippers but with a higher interest rate. They serve as the middle man that allows the flippers to have an access to the money that they can use for their real estate investing.
Why People Prefer Hard Money Loans?
Despite of the fact that it is quite possible to apply for a short-term loan on your bank, you will also realized that these types of fix and flip loans will be hard to approve. Normally, the banks are generating money from the interest that they charge on you. Short-term loan will never generate the same amount of money that the bank can create from a long-term loan. This is one of the reasons why this type of loan is challenging to obtain. On the other hand, hard money loans come with minimum set of requirements. The lender can approve your application in a matter of 15 days or less.
What Are the Benefits of This Fix and Flip Loans?
You are probably thinking why an investor would take out a loan that comes with a higher interest rate. As we mentioned above, the hard money loans can be obtained easier compared to bank loans or other fix and flip loans. In terms of flipping houses, having an access to loans that you can use to purchase and refurbish a house is essential. On the average, you can obtain the cash in about 15 days; this means that you can immediately put it into action. This allows you to land good deals before the other flippers do. Speed is very crucial in real estate investing.
How Do I Apply For a Loan?
In case you are prepared to apply for hard money loans, the next step is to search for hard money lenders within your area. You need to personally reach out to these lenders and provide them with financial documents that can prove your financial stability such as 2-3 proof of your past projects. They will also look at your tax record, credit rating and pay stubs so make sure to prepare those documents.
Investors are obtaining hard money loans in order to accumulate money that they can use in flipping houses. In case you are interested with real estate investing particularly on fix and flip, and you need a capital that will help you jump start your project, the hard money lenders will help you put your goals into actions. Hopefully, with this article, you now have the confidence to apply for this type of loan that you can use to finance your prospected real-estate deals.