If you’re like many people, you’ve heard of hard money loans – but who are they for, and who should use one?
Here’s what you need to know.
Who Should Use a Hard Money Loan?
Hard money loans might be a good idea for anyone who’s interested in:
- Buying a fix-and-flip house
- Investing in land
- Building new construction
Additionally, they’re good for people who have credit issues or for real estate investors who need to pounce on a great deal.
Real estate investors and others choose hard money loans because they provide quick funding. In fact, some loans are funded within just a few days. With a conventional loan, it typically takes 30 to 45 days (and that’s when there aren’t any snags in the transaction – it can take even longer in some cases).
Sometimes people use hard money loans because they’re having a tough time getting conventional financing, too. Look – life doesn’t always go the way we plan it, and credit issues happen. With hard money loans, your lender will look at your credit score – but there’s so much more to an approval than that. Your credit score isn’t going to make or break your approval on a hard money loan.
The interest rates you’re quoted on a hard money loan will vary from lender to lender. That’s because hard money lenders are facing more risk than conventional banks are – so the interest rate will be higher than it would be with a conventional loan. However, you don’t take out a long-term hard money loan; these are usually short-term loans that you pay back quickly.
Anyone who needs money quickly, or who has a hard time qualifying for conventional financing, can benefit from a hard money loan.
Do You Need a Hard Money Loan?
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