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Antioch-California Hard Money Loans
Many investors that find it difficult to qualify for other financing options believe the hard money loan to be their saving grace. While hard loans aren’t right for every borrower, they are a viable option if you need financing for your real estate ventures.
Understanding Hard Loans
Hard money loans are used in real estate investments. Hard money lenders in Antioch, California base the loan off of your collateral, making it easier for investors to get cash without having to prove their ability to repay the loan.
The Different Types of Hard Loans
As hard money loans are provided by private lenders, there are many different kinds of loans a borrower can obtain. The most popular types of hard money loans include:
- Bridge loan: A bridge loan is right for you if you intend to purchase a property quickly and intend to refinance it or resell it. These loans are ideal for the investor that wants to purchase a property immediately, but doesn’t have adequate funding to do so as they are waiting for current property to sell.
- Fix-and-flip loan: You may want to use a fix-and-flip loan if you are planning to rehab a property so you can resell it quickly.
- Owner-occupied loan: An investor may choose this loan if they can’t qualify for another type of financing and need to purchase a property.
- Construction loan: You can obtain a construction loan if you intend to develop a property to refinance or sell it and need the money to start on a construction project.
- Other: If your situation doesn’t quite fit into the scope of the other loans, there are many hard money lenders that will create a loan agreement designed to meet your needs.
How Do Hard Loans Work?
While hard money loans offer borrowers a lot of flexibility, they aren’t appropriate for every situation. Many lenders will only give out hard money loans to investors, so borrowers looking for capital to fund their private homes often have to opt for more traditional options.
- Terms of the loan
Compared to other financing solutions, hard money loans are given for a small period of time, which is typically less than a couple of years. Usually, most lenders allow for a 12-month term. Borrowers are often not expected to make equal monthly payments towards the interest and principal when paying the loan back. Instead, many hard money lenders require that borrowers either make interest-only payments or one final payment when the loan comes due.
- Hard loan benefits
Once you learn what is expected of you regarding the repayment process, you will be able to better understand the benefits of hard money loans. Many investors choose hard loans because of the quick financing and short loans terms. Paired with the simple application process, investors that have a guaranteed plan for paying the loan back stand to benefit the most from hard money loans.
- Acquiring the loan
Investors hoping to be approved for a hard money loan often have to bring some of their own money to the table. Depending on the lender, borrowers may have to front enough to cover the after-repair value or the loan-to-value of their property. The ARV and LTV compare the purchase price of the house with repair costs and the final appraised value of the property after it is rehabbed. Investors must be prepared to make their down payment based on either the ARV or LTV for their property for these types of lenders.
Once you’ve reviewed all the details associated with hard money loans, you should be better able to determine if they will meet your purchasing needs. Keep this guide in mind as you consider approaching a lender about hard money loans.