Eugene-Oregon Hard Money Loans
Hard money loans are types of funding for people who don’t want to get a conventional mortgage or don’t qualify for a mortgage. A borrower that wants a hard money loan is usually looking for a way to fund a project quickly. There are several types of projects that qualify for hard money loans.
What is a Hard Money Loan?
A hard money loan is funding for real estate. Most hard money loans have short terms and higher interest rates than traditional loans. They are good options for borrowers that need to fund a project or buy a home quickly and can pay off the lender soon.
Different Types of Hard Money Loans:
- Fix and Flip
This loan is for real estate investors that buy a home, renovate it, then sell the property and pay off the loan.
- Bridge Loan
These loans are for borrowers that need to buy real estate fast and have the intention of reselling or refinancing the property.
- Owner-occupied Loan
This type of hard money loan must follow certain rules and regulations. They usually only last for three to four years, then the lender needs to have long-term financing.
A construction loan is for a construction project that an investor wants to start quickly. The intention of the investor is usually to refinance or sell as soon as the construction is complete.
- Other Types of Hard Money Loans
Private lenders fund different projects that aren’t on this list. Lenders must follow rules and regulations with the real estate funds they lend to borrowers.
The Benefits of a Hard Money Loan
- Some hard money loans offer interest only payments.
- Easily qualify.
- Quickly qualify.
- Faster application process.
When to Consider a Hard Money Loan?
If a borrower has a low credit score. Self-employed borrowers are also fond of the ability to get a hard money loan versus a conventional loan. When a borrower needs money fast, a hard money loan is usually the easiest way to get funded.
How to Qualify?
Qualifications depend on the lender. It is easier to qualify for this type of funding with a down payment and good collateral. It is necessary to have a business plan and appraisals for many types of hard money loans.
Asking a potential lender enough questions is important for the borrower to feel comfortable with the loan, the payments, and their experience. A potential lender needs to provide their real estate broker license ID when asked, so a borrower can make sure they have the qualifications to lend money. If a borrower doesn’t feel comfortable with a lender, they should look for a new lender. Most real estate projects come with stress, so it is important to feel comfortable with the lender and the terms of the loan.
If a borrower decides against a hard money loan, there are other types of funding. Some alternate funding sources include FHA, VA, Equity loans, lines of credit and bridge loans and conventional mortgages.
Not all borrowers qualify for a hard money loan. Lenders may not agree that the real estate project has potential, or the borrower may not have enough of a down payment. This type of loan has a shorter term and higher interest rates, so a borrower may decide that this isn’t a choice for a real estate project.
If a borrower is not able to pay the lender at the end of the project, talking with the lender may buy some added time to pay the loan off. A lender has the right to foreclose when a borrower can’t pay.