You’ve probably heard the term cash-out refinance before, but what does it really mean – and what does it have to do with hard money lending?
Explaining Cash-Out Hard Money Loans
A cash-out refinance is a mortgage transaction in which the new mortgage amount exceeds the existing mortgage amount. Its purpose is to pull out equity; it’s an alternative to a home equity loan.
It’s a way for borrowers to get money out of the equity in their homes to pay down debt or make additional purchases.
Cash-Out Loans for Investors
If you own a property, either with no loan against it or with a low loan balance, you could be eligible for a cash-out hard money loan. Many people in similar situations use a hard money cash-out loan to reinvest in the real estate market, but that’s not always the case.
What to Ask Yourself to Find Out Whether a Hard Money Cash-Out is Right for You
In order to be sure you’re making the right decision, it’s a good idea to evaluate your situation before you apply for a hard money loan.
What’s my “exit” strategy? A hard money loan is a great source of financing, but before you apply for one, it’s a good idea to have a plan for the investment and for repaying the loan.
Is a short-term loan the right answer right now? For the most part, hard money loans last between 6 and 18 months, although the term depends on your circumstances. A hard money loan might not work for your situation, so make sure you evaluate your needs before you apply.
How is my credit? Although hard money loans aren’t considered “traditional” loans, you still need to have a satisfactory credit score in order to […]