When you need money and don’t have time to wait for a loan through a traditional bank, hard money loans may be the answer. This type of loan is backed by the value of the property you’re using as collateral, so it’s a faster way to get the cash you need.
What is a Hard Money Loan?
A hard money loan is a type of short-term loan that’s typically used for real estate transactions. Hard money loans are usually funded by private investors or companies, rather than banks. The loans are then secured by the property you’re purchasing.
How Does a Hard Money Loan Work?
Hard money loans work by using the value of your property as collateral. The loan is typically for a shorter period of time than a traditional bank loan, and you’ll usually have to pay a higher interest rate. However, the process is faster and you can get the cash you need right away.
Related: What is a turnkey rental property?
Who is Eligible for a Hard Money Loan?
To be eligible for a hard money loan, you’ll need to have good credit and enough equity in the property you’re using as collateral. Equity is the portion of the property’s value that you own outright.
What are the Benefits of a Hard Money Loan?
The main benefit of a hard money loan is that it’s a fast way to get the cash you need. The process is typically much faster than going through a bank, and you can use the loan for any purpose.
What are the Risks of a Hard Money Loan?
The biggest risk of a hard money loan is that you could lose your property if you can’t repay the loan. Because the loan is secured by your property, the lender can foreclose on your home if you don’t make your payments.
What Do People Use Hard Money Loans For?
Hard money loans are typically used for short-term financing, such as flipping a house or paying for renovations. They can also be used to finance the purchase of a property before you get a traditional mortgage.
How Do You Get a Hard Money Loan?
To get a hard money loan, you’ll need to find a lender and fill out an application. The lender will then appraise your property and determine how much they’re willing to lend you. Once you’re approved for the loan, you’ll need to put down a deposit and sign a contract.
Are Hard Money Loans Usually Good for Conventional Real Estate Purchases?
Hard money loans are not typically used for conventional real estate purchases. They’re typically used for short-term financing or when you need cash quickly.
Often, investors use these types of loans to buy, fix up, and sell properties quickly. This can be a good way to make a profit, particularly if you intend to move a property quickly.
What’s the Difference Between a Hard Money Loan and a Mortgage?
A hard money loan is a type of short-term loan that’s backed by your property. A mortgage is a long-term loan that’s backed by your property. Hard money loans have shorter terms and higher interest rates than mortgages.
Should You Get a Hard Money Loan?
Whether or not you should get a hard money loan depends on your situation. If you need cash quickly and have passable credit, a hard money loan may be the right choice for you. However, if you’re looking for a long-term loan, you may be better off with a mortgage.
Do You Need a Hard Money Loan?
Paces Funding is the top hard money lender in Georgia, North Carolina, South Carolina and Tennessee. Apply for a hard money loan here or click through our site to find out how we can help you now!