Is a Hard Money Loan Right For You?

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What is hard money lending? You may have heard this term, but not know exactly what it means. Hard money lenders in Georgia provide loans in cases where traditional mortgage loans are not an option. This might be because the borrower has trouble finding a line of credit or because the borrower needs the money sooner than traditional lenders could get it to them. But is this a good way to borrow?

Hard money loans have their perks and pitfalls, but they’re a great option for those who need them. Whether this is the right type of loan for you depends on factors such as what you are borrowing for, how quickly you need a loan, and the length of time you intend to borrow. Here are some of the top factors to consider when you’re thinking about investing in hard money loans.

What Are You Borrowing For?

Hard money loans are appropriate in cases where speed is important, such as in real estate transactions. Many house flippers find these loans useful because they offer quick approvals that allow people to get the loan money fast. This enables the homeowner to make necessary improvements to a property and sell it fast, hopefully making enough to pay back the loan and turn a profit.

Similarly, hard money loans are good options as rental house loans for landlords who need repairs before their property will attract clients. Some people also use this type of transaction as a type of vacant land or rural land loan. Hard money loans enable someone to purchase property and develop it as speedily as possible so they can begin turning a profit.

What Makes Hard Money Loans So Much Faster?

Traditional lenders carefully investigate before approving someone to borrow money. Even for people with excellent credit, lenders move slowly through multiple steps before granting loans.

In contrast, hard money loans are a type of private lending. This means the terms of the loan can be drawn up directly between the borrower and the lender, and the loan does not have to be underwritten, saving even more time.

How Long Do You Need To Repay The Loan?

One downside to hard money loans is that they carry high interest rates. For example, most hard money lenders in Atlanta loan money at an average of 13.3%. The reason interest rates on loans like this are high is because they are intended for only a short time, such as six to twelve months, although periods of up to two or three years are possible in some cases. For this reason, there are times when another type of loan may be more appropriate. For those who can make a quick turnaround, however, there couldn’t be a better option to consider.

What Other Loan Options Are Available To You?

It can be tough to get a loan if you don’t have great credit. If you have foreclosures or bankruptcies in your past, this can make borrowing almost impossible.

However, hard money loans are based on the value of the collateral, meaning that your personal financial history is less important than it would be in other lending situations. If the borrower becomes unable to repay the loan, the lender will take the property and sell it, recovering their money. In this way, hard money lenders make borrowing possible for people who otherwise would be ineligible.

What Do You Need For Private Lending?

One of the most important factors for private lenders the value of the purchased property. Remember that the property you’re purchasing becomes your collateral, so when you approach hard money lenders, you must provide evidence of the property’s value.

Knowing the value of your specific property, its neighborhood, and the value of similar properties helps prove your case to a lender. Online home-buyer websites often provide a history of a home’s worth over time so you can determine whether the property is likely to increase in value. This information reassures lenders their own investment is safe.

Finding A Hard Money Lender

Before signing with a lender, make sure you are clear on the terms of the loan and all fees that will be associated with it. Read reviews of the lender and speak with them in person before providing any information online. Finally, make sure your lender is in good standing with their own creditors.

Hard money loans are a great option for those who need them. If you decide this is the best type of loan for you, there are many hard money lenders in Atlanta, GA that are willing to talk with you about financing options. Contact Hard Money Georgia to get approved for your hard money loan today!