Hard money loans are an option for consumers who want to buy a home that can serve as an investment for them. These are the types of loans that are available to people who are unable to qualify for a traditional mortgage loan. In general, there are many hard money lenders across the United States who allow people to borrow money to purchase a home. Many of them will also offer additional cash so that the borrower can make repairs to the new home.
One of the reasons why Beverly Hills hard money loans are attractive to people is that the monthly payments on them are interest-only and carry rates as low as nine to 15 percent. The loans are made based on a property that is used as collateral to secure them. When a consumer needs a loan very quickly, hard money loans may be the only option. However, as with anything else, these loans come with specific advantages and disadvantages. It’s important to explore them if you are considering taking out a hard money loan.
What are the Pros of Beverly Hills Hard Money Loans?
There are certain advantages of hard money loans that can make them attractive to consumers who either cannot qualify for traditional mortgage loans or who need a loan extremely fast. These are the top pros of hard money loans:
• Approval and funding are fast: When you need money fast, a hard money loan can be a very valuable tool. Generally, the top advantage of these loans is that the approval process and funding is quick. In many instances, a person can be approved for a hard money loan on the same day as they apply. The lender looks into certain details, such as the property, the amount of equity or down payment that the borrower has available, the borrower’s experience in real estate, how the borrower will repay the loan and the borrower’s cash reserves for holding costs. Overall, a person is approved for a hard money loan as long as all of those details are reasonable.
• Hard money loans have fewer requirements: There are fewer requirements in hard money loans, especially compared with traditional loans acquired from banks. Requires are the borrower having enough equity in the property, having an exit strategy, experience and enough cash reserves for holding costs. Fewer requirements make it easier to be approved for hard money loans.
• Funding for projects other lenders won’t allow: Hard money loans are provided to borrowers for projects that lenders of traditional loans wouldn’t even consider. One example is fix and flip loans, which let an investor purchase property while relying on short-term financing, quickly make repairs and then sell the property for profit.
What are the Cons of Beverly Hills Hard Money Loans?
Hard money loans also come with disadvantages. They include the following:
• Interest rates are higher: Hard money loans have higher interest rates than standard loans. This is to protect the lender because of the loans’ greater risk.
• They are short-term only: Most hard money loans have terms ranging one to two years. These are the type of loans that are meant to be short-term.
• They require down payments or equity of at least 25 to 30 percent: Hard money lenders tend to overlook certain shortcomings of borrowers but require that the borrower have sufficient equity in the property. Generally, hard money lenders put an emphasis on collateral.
Overall, Beverly Hills hard money loans are best for individuals who need short-term loans. They are especially appropriate for investors who fix and flip properties. Purchasing a property to make repairs and improvements and then selling it shortly after is a great reason to get a hard money loan.