What are the Advantages of a Hard Money Lender?
Maybe you’ve noticed in recent years how conventional bank loan money has dried up for certain people. The phrase “bad credit” doesn’t show up much anymore in TV commercials for big banks. Luckily there are still financial institutions that work with homeowners who may no longer qualify for conventional loans. The following details explain how a hard money lender can be the answer to your financial needs.
What is a Hard Money Lender?
You may come across a wide variety of financial firms that consider themselves to be hard money lenders. Some may treat you the same way a regular bank will, which is to base loan qualification on your credit history. More lenient lenders will look beyond your credit report and just focus on your property value and ability to pay back the loan with interest. What they all have in common is that they issue loans based on a percentage of your property asset value, as your existing home becomes collateral.
Many times a hard money lender will advance you cash that’s worth up to 75 percent of your property value. If your home is worth $250,000, then your loan could be as much as $175,000. As always, manage your loan wisely so that you can protect your asset. In the best case scenario, if you make the right moves, your loan can pay for itself.
How Can It Work To Your Advantage?
The most attractive aspect of a hard money loan is that it gives you the cash you need to make a worthwhile investment. It’s very difficult in an uncertain economy to rely on a small savings account as your safety net. But if you have access to the right amount of cash, it’s possible to grow your assets in a way that can set you on the path to resolving financial problems and still have plenty of cash left over.
The best thing you can do with a lot of money is invest it in something safe. While no investment is ever guaranteed, real estate is usually a money making venture that provides impressive returns, which can help you reorganize your finances. In many markets home prices are still significantly lower than record levels before the crash, as there are still plenty of opportunities to find a dream home or investment at bargain prices.
By taking out a loan from a hard money lender, you can invest in a new property. From there you can sell your existing property or rent out the new property. Either way you have the opportunity to get ahead financially. As long as you have a solid plan to repay the money, it can be a profitable move. In other words, don’t plan on quitting your job just because you were able to get a huge cash advance.
Hard money loans can be used for various reasons, such as short term financing. They are most effective when you have a solid real estate investment plan. The first steps before approaching a hard money lender involve deciding how you will use the money and how you will structure repayments. You will need to do thorough research on real estate websites that let you search for properties within your spending range. Once you find the property you want, start working on your loan plan.