Situations Where a Hard Money Loan Can Help

Real Estate Agents

If you’re considering real estate investment, there’s a tool that could be helpful in bringing your investment dreams to fruition without extending your credit or hurting your bottom line. That investment tool is known as a hard money loan. Hard money lending in San Antonio can provide investors with quick access to funds for investment without the long, drawn out application period of traditional loans. Hard money lenders help connect real estate investors with the funding they need to take advantage of a dynamic market. They use the value of the purchased property as collateral instead of relying on the borrower’s credit alone.

Hard money loans are perfect for many real estate investment purchases because of their speed of processing and easy accessibility. In fact, they are tailor-made for a few specific circumstances that are common among investors who play the real estate market. Keep reading to learn more about top situations in which hard money loans can help buyers in need of funding.

When Time Is Critical

In real estate investment, those who aren’t ready to act in the moment often find themselves missing out on potentially lucrative real estate deals. A wise investor should have constant access to a sizable amount of funding in order to successfully play the real estate market and outbid competitors for the premier investment properties. That’s one reason hard money loans can be helpful to those in the business. It can provide quick funding that allows investors to seize opportunities to buy high quality properties. While those who apply for a loan from a traditional banking source are waiting for their applications to be processed, hard money borrowers can take action and close on a purchase in short order.

Keys to House

When Credit Is Damaged or Overextended

With traditional financing, your ability to borrow is only as strong as your credit history. That’s because traditional lenders base their decision to loan you money based on the way you’ve handled previous loans as well as your current debt obligations. That helps them assess the risk of loaning funds to you. If you have damaged credit, your chances of getting a loan through a traditional source are significantly lower than they are for someone with stellar credit. However, hard money loans don’t rely on your credit score to make a determination about loaning money to you. Instead, the value of the property you are purchasing is the critical concern of the lender. In other words, the property you are purchasing will serve as collateral on the loan. Therefore, damaged credit doesn’t matter nearly as much, which increases your chance of getting a hard money loan even when you’re not eligible for a traditional loan.

Funding Capital Improvements

Hard money loans can also be helpful in situations that involve extensive remodeling of a property that you already own. For example, if you purchased an investment property only to discover that the renovations will be far more extensive than you anticipated, you could run out of funding. In that case, you’d still have to pay back the traditional loan you took on the property without the benefit of revenue generated from it. However, you could also secure a hard money loan quickly that would provide the funding to allow you to move forward with your renovation so that you could pay back both principals in a timely and efficient manner.

Hard money loans can provide real estate investors with an excellent tool for seizing opportunities and creating profit-generating real estate projects. To learn more about the ways that hard money loans can benefit real estate investors, contact Investor Loan Source at (409) 735-6267.

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