There are many financing options for real estate investors available today. One of the most popular options has become the hard money loan. A hard money loan is a loan collateralized by a hard asset (in most cases this would be real estate). One of the biggest differences between a hard money loan and a conventional loan is that hard money lenders use the value of the property versus the borrower’s creditworthiness to determine the loan.
Hard money loans tend to have terms of 12 months, but some can be extended to as long as two to five years. This works in favor of investors who plan to purchase a home in need of repairs, rehab it and sell it quickly for a profit
Advantages of Hard Money Loans
One of the biggest advantages is that there are less restrictions with hard money loans when comparing them to traditional loans. Lenders rely less on a borrower’s credit score and more on the value of the property itself. This allows borrowers with a less then perfect credit score to obtain a loan.
Another key benefit of hard money loans is that they can be acquired quickly. Loans from banks and traditional lenders often take up to 60 days to issue, while hard money loans can often fund in a week. This is especially important if investors hope to acquire properties with competing bids. Time is money in real estate and time is on your side with hard money.
Hard money loans also provide tremendous leverage for fix and flip and buy and hold investors. The investor can enter a project without putting their own money at risk and remaining liquidity. This is a huge reason real estate investors seek out hard money lenders.
An Easy Decision for Investors
Although many investors with imperfect credit scores find hard money loans easier to qualify for, because of the higher risk involved these loans often come with higher interest rates. Despite this, they are an integral part of the the real estate investing process and can be utilized when a traditional loan doesn’t make sense or is too difficult to get.
Hard money loans aren’t just for flippers. At Investor Loan Source, we offer loans for rental properties, as well as commercial investment projects. Be sure to ask one of our loan specialists about our exclusive wrapable loans, commercial and one-time close fix and rent options. We make hard money easy – the application process is fast and simple. Contact us at 409-735-6267, email us or apply online today.