If you’re in the real estate market, you might have heard of something called hard money loans. Being successful in any market is all about having the right information and a solid understanding of industry terms. Learn how such loans work to see if they’re a good fit for your investment goals.
Understanding What a Hard Money Loan Is
Simply put, hard money loans are a type of short-term financing, usually about 12 months, that’s secured by a real estate property. Just like with other types of financing, you’ll need to make monthly payments on the loan, including interest. The overall value of the property in question determines how much you’ll be able to borrow, and that property can be either one you want to acquire or one you currently own.
Is Hard Money Financing a Good Choice for You?
Know that a hard money loan is best suited for house flippers, quick buys, land financing and investors who want financing to scoop up a property and update it before going to a bank and applying for a loan as a way to pay for the hard money loan. No matter into which category you fall, make sure you understand the type of hard money loan you need, as some lenders specialize in specific types of properties.
You Don’t Have to Have Perfect Credit
Something else worth pointing out when it comes to hard money loans is the fact that you do not have to have the world’s best credit to apply. This is because funding is based on the value of the property rather than your current credit score. You should also know that this type of financing is done faster than traditional lending, sometimes within just a few days.