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You’ve been considering purchasing a home in the near future, but aren’t sure how to fund it. Well, hard money loans for real estate may be your golden ticket.

But what’s so special about a hard money loan? Why shouldn’t you go with a traditional home loan?

Hard money loans differ significantly from traditional loans and are better suited for certain groups of people. Keep reading to find out if this type of loan is right for you.

What is a Hard Money Loan?

Let’s start with the basics. Several types of loans exist, so what, exactly, is a hard money loan?

Hard money loans are short-term loans that are funded privately instead of by a traditional bank or credit union. Borrowers use collateral to get these loans.

Lenders do consider the borrower’s credit. But, the borrower’s ability to show something of value with which they can pay back the loan is the lender’s biggest concern.

Those interested in purchasing real estate quickly should consider pursuing a hard money loan.

Hard Money Loans for Real Estate

Due to quick availability, hard money loans for real estate are popular with investors and house flippers. They are useful for ordinary home buyers as well.

Hard money loans are great for buyers looking to secure quick sales since these loans can close within only a few days.

When considering a hard money loan, keep in mind that hard money lenders are primarily interested in property value. If you have the equity to prove you can pay back the loan, you’ll likely receive approval.

As an added benefit, you can use hard money loans for any type of real estate.

Hard Money Loans vs. Other Types

Hard money loans differ significantly from typical home loans. One major draw is that they’re obtainable much more quickly. However, this type of loan does have some drawbacks.

Interest rates for typical mortgage loans currently sit around 4.5%. Rates for hard money loans are much higher, around 10% and above. Take this difference into serious consideration when determining which type of loan is best for you.

The higher rates may not be as damaging as they appear, however, since hard money loans also have much shorter term lengths than traditional loans. Terms lasting 12 months are common, but it’s possible to extend that length.

Payment of hard money loans may differ from that of traditional loans as well. Monthly payments are made on interest, or may include principal as well. A large payment may also be expected at the end of the term.

Ideal Seekers of Hard Money Loans

While the term length and quick availability are definite draws, they aren’t the only things that make hard money loans attractive. Certain people may be particularly interested in these types of loans.

Hard money loans offer more flexibility and availability than traditional loans. Loan seekers with a lack of income history, or who are unable to get a traditional loan are perfect candidates.

Quick funding seekers should also consider a hard money loan. Loans from banks or credit unions often take more than a month, while hard money loans may be approved the same day. Funding can take a little longer but can occur within the week.

Choose What’s Best for You

As you consider pursuing a hard money loan, closely examine your situation and needs. What’s more important to you, lower interest rates, or obtaining money faster?

If you haven’t been able to obtain approval from other sources, a hard money loan may be a great option for you.

As long as you possess the equity required, you could be getting into a new home much sooner than you may have anticipated.

Get started with your hard money loan by visiting our website today.

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