There’s a good chance that you’ve heard of hard money loans, but who are they for, and why do they work for some people and not others? This guide explains.
Who Should Use a Hard Money Loan?
There are generally two types of people for whom hard money loans work the best: investors and those who have been rejected by banks. Here’s a closer look at each.
Hard Money Loans for Investors
Generally, people who intend to purchase a home at a low price, fix it up and then sell it at a higher price are great candidates for hard money loans. Because these loans are short term in duration, and because borrowers can borrow against and after repair value, they are great products for investors.
Investors can use hard money loans to get fast cash to jump on great deals. They can also borrow enough to make repairs on a property so that they can sell it for a profit.
Related: FAQ on hard money loans
Hard Money Loans for People Who Have Been Rejected by Banks
Though this isn’t always the case, hard money loans can be good for people who have been rejected by banks. For example, people who have bad credit and can’t get a conventional loan but need to purchase a home quickly may benefit from these types of loans. However, if you fall into this category, you need to know that the interest rates on these loans are typically higher than they are on conventional loans. Additionally, they are short term loans; they’re not designed for long term repayment plans.
Do You Need a Hard Money Loan?
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