Hard-money loans are just one of the many loan options that one has to consider, and one that you should know about if looking to stay in the competitive world of real estate. Let’s simplify what a hard money loan is, why it is an attractive loan option and what you can do to have the best chances of getting your hard-money loan approved.
So, what is a Hard Money Loan?
Hard money loans are classified as being short-term loans, specifically used for investment or commercial real estate. These loans typically do not come from traditional, public lenders, but instead private individuals, hedge funds or corporations. These private lenders will use the real estate asset itself as collateral for the loan.
Some often refer to hard money loans as being short-term bridge loans, meaning that they are used to “bridge” an acquisition that either has to close fast or needs rehab work. For example, if you’re buying an investment property that needs rehab work you need a loan to help you close fast and one that provides the funds to cover the construction costs so you can maximize the properties value and have time to stabilize it in order to sell, refinance or cash out refinance for maximum value.
Why is a Hard Money Loan the Right Option for You?
Simply, hard money loans are an easier option for getting quick cash. Because hard money loans are not through typical lenders and are usually through private entities, the approval process is much quicker (typically within a few business days), and will often have shorter maturity periods. However, with this comes higher interest-rates and the necessity of reasonable collateral.
As stated, hard money loans can act as a bridge loan, but also have its benefits in many other ways. Those investing in fix-and-flip properties utilize hard money loans fairly often, being able to get the money they need to renovate a property in addition to the purchase price, this enables them to be able to turn it over quickly, repay their loan, and make a profit. Since a hard money loan is typically interest only the faster your can sell or stabilize the property, the more money you will make. Additionally, in many situations using hard money allows you to close quickly which often allows you to not only obtain a discount on the purchase but beat out the competition in the event of multiple offers.
Qualifications for Your Hard Money Loan Application
After making the decision that a hard money loan is the right loan for you, the next best thing to do is to prepare a clear financial plan for the money that you will be lent. Though the purpose and application of the loan amount is of main importance to the lender, they may also ask for additional documents pertaining to your occupation, occupational history, and credit score.
Why is Tampa Florida the Place Many are Looking to get a Hard Money Loan?
With Tampa Florida’s real estate market being one of the hottest in the country the opportunity for investment is better than ever. Hard money loans are a great option to get the quick cash you need. CambridgeCapital.org can get you up to $3 million in as little as 5 days! And 100% of the construction costs. Click now to see if you qualify!