So you’ve decided to invest in real estate. Perhaps you’re looking at a property with the intention of investing in renovations and “flipping it”, ultimately making a profit. Like most people who buy property, you’ll probably need a home loan in order to secure the purchase. But, if you don’t have an extensive credit history or a large bank account, you might find it difficult to be approved for a mortgage. Additionally, mortgage loans can take a while to secure, and if you plan on flipping a house, you probably don’t have much time on your hands.
This is why you may be looking into hard money lenders. But if you’re new to the business, you might not know much about what they have to offer. That’s why we’re looking into everything you need to know about hard money lenders. Let’s dive in!
1. Your Chances Of Being Approved Are Higher
When you attempt to secure a traditional loan, you will most likely be evaluated by a major financial institution. This means that you’ll need to meet a certain set of rigorous standards. If you’re younger and, as previously mentioned, don’t have much of a credit history, it may be difficult for you to get approved for a hard money loan regardless of your financial status. Additionally, those with medical debt or student debt may find it difficult to be approved. Hard money lenders can evaluate you on a more individualized level. Their standards are often more varied and personal. For that reason, you’ll be more likely to be approved for hard money loans.
2. They’ll Have Shorter Terms
Often, hard money loans come with shorter terms than traditional loans. Their terms are typically six to 24 months, and they’ll be interest-only loans. Often, hard money loans are only available for non-owner-occupied properties as well, making them ideal for flipping projects.
3. The Information You’ll Need Is Straightforward
Typically, you’ll be required to submit fairly simple information. You’ll need the property location, recent appraisal pricing and inspection results, the purchasing price and theoretical resale price, and the estimated renovation expenses. You’ll also need your own credit score, current income, total assets, and experience.
A hard money loan is a major responsibility. But in the right circumstances, they could be a good option for you.