At one point or another in your real estate career, you’ll end up hearing about one specific loan that many financial firms have been lobbying for in recent years: hard money loans.
Although anyone purchasing a home, commercial building, or parcel of land will think about a standard bank loan to receive enough funding, the option in question is also a formidable option. Today, the hard money type of financial assistance has amassed quite a bit of popularity in the market, thanks to the different benefits that it provides!
The history of hard money loans
Initially, hard money loans packed a reputation as a negative concept because of their tie with undesirable lending conditions.
When these forms of financial assistance were introduced, they immediately packed on some notoriety because dishonest lenders used them to trick people into taking out loans that were not worth it. With hidden interest rates and difficult approval processes, these loans were troublesome from the start to the very end.
Today, hard money loans have proven themselves to become a reliable form of financial assistance as they are even used in an increasing number of real estate loan applications. This is now a possibility, thanks to the fact that there are regulations in place that make this type of loan safe and secure, such as DFW Investor Lending’s options!
How do hard money loans work?
From a basic standpoint, the function of traditional loans is based on the creditworthiness of the borrower, something that is determined through credit scores and borrowing history. On the other hand, hard money loans are seen as rather unorthodox because the way they work is mainly based on the value of the property that will be purchased.
When you use a hard money loan to generate enough financial support to take on the cost of a mortgage or property, the main detail worth watching out for is that doing so puts your property as collateral. Although this method is fairly risky considering the different factors at play, private individuals and organizations help insure themselves by recuperating costs in lender delinquency cases! If you apply for a hard money loan, you must understand that it’s a financial assistance that is meant to be repaid in the short term.
Considering that these loans are meant to be repaid in one to three years, it’s best to say that they’re optimal for those who wish to flip homes quickly and see significant returns. In fact, real estate flippers opt to use these loans more often because their self-employed status makes it difficult for them to provide consistent income banks to get a loan, something that won’t be a problem with hard money loans!
Why should you consider getting a hard money loan?
Although the conditions set by a hard money loan may seem impractical, the benefits that you stand to gain will convince you that there’s no better option that you should consider. Let’s look at some of the most critical reasons for you to consider getting a hard money loan if you want to purchase more real estate to flip:
- Faster processing: In the real estate industry, the opportunity of getting a property that’s easy to flip will always prove to be a fleeting one that needs to be acted on right away. Thankfully, going for a hard money loan will help ensure that you don’t miss out on the chance to make a killing because getting approved will only take a few days—a long shot from the month-long timelines of standard loans!
- Convenience: When you purchase a listing to flip, the whole process will be more convenient and easy to deal with. Instead of worrying about extra papers, unbearable standards, or extra delays that may cause you to miss out on the property that you’re trying to chase after, a loan from DFW Investor Lending will help you move forward much quicker!
Although hard money loans were initially perceived as undesirable and impractical ways to get funding, their reformed versions are proving to be the best options worth considering—even more so for real estate! Through the help of these forms of financing, you won’t ever have to worry about missing out on the opportunity to make a significant amount of profit ever again!
DFW Investor Lending, LCC is an accredited and trusted hard money lender in Dallas that provides the best rates for real estate investors. If you want to cash in on an investment opportunity in the ever-lucrative Texan real estate market soon, look no further because we’re here to help!