Hard
money loans are the best friend of real estate investors. These loans are the
quickest way to secure a deal. However, hard money lending might be complicated
and therefore you should know what you are receiving before making decisions.
The more you know about hard money
lenders Dallas, the better for you. Hard money loans are the biggest source
of capital these days.
What are Hard Money Loans?
Hard
money loans are loans that are issued to investors based on property or hard
assets. Though hard money lenders consider some factors such as credit, income,
and experience of the individual borrower, they are not a high priority while
deciding the eligibility of borrowers and the loan amount. These loans are
available with higher interest rates and they have a shorter-term period of say
12 months. Hard money lending is a quicker kind of funding and the loans are
issued within days and weeks rather than months.
Need for Hard Money Loans
Real
estate investors focus on fix and flip properties and rental properties and
they turn to these loans as their means of financing at a time when they have
failed to get conventional loans from banks. The investors, who are unable to
meet the bank standards including income and high credit score, find hard money
loans a great alternative kind of funding.
Finding hard money lenders
Many
new investors want to know how they shall find lenders of hard money for
financing their projects. There are a few simple ways you can get these loans
including the following:
·
Traditional Lenders or Real Estate Agents- Ask
the mortgage broker or the realtor whether they know any hard money lenders
·
MeetUp meetings- Hard Money lenders speak at
real estate events. You can ask fellow members whether they know trustworthy
lenders or not.
·
Google Hard Money Lenders- You can google and
find them. However, be careful as there are many rogue individuals. Talk to
people and ask for references to receive their opinion.
Using hard money loans
Hard
money lenders issue loans related to all kinds of property, however, there are
certain kinds of investments that are made for hard money. Construction loans,
rehab projects, and land loans are financed through hard money.
It
does not indicate that other investments cannot be financed by hard money. When
the buyer of any property has to act quickly or has credit issues, he should
seek hard money loans due to the convenience and speed offered by this loan.
Hard money lenders versus other
lenders
The
main difference you will find between hard money lenders and other lenders is
that hard money financing does not give importance to credit history or your
income. Rather, hard money lenders Dallas
see the value of the property as its deciding factor and puts emphasis on the after-repair
value.
Some
other differences are:
·
Hard money loans are for a short term. The
borrowers cannot have a repayment period of 15-30 years. These loans have 6-18
months repayment period.
·
A hard money lender does not invest in owner-occupied
residences as these properties have many rules and regulations.
·
Hard money lenders give their own money or
they raise it from investors. This loan amount is based on property
specialization and the risk they are comfortable with.
·
Hard money lenders have flexible negotiating
terms. They have specific interest rates, upfront points, and defined
durations.
Hard
money loans for real estate are common nowadays in housing sectors. These loans
give investors an edge over traditional financing. The borrowers can get
capital faster and thus if you want to fund any deal, it is difficult to ignore
hard money loans.
