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Fullerton Hard Money Loans
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Fullerton, located in North Orange County, is one of the California cities with an outstanding quality of life. The mix of commercial, residential, cultural, industrial and educational opportunities makes Fullerton the place to call home or invest in property.
For some Fullerton residents, they may not be able to invest in property here or own a home. Poor credit scores, too much debt or low income may be the reason why credit unions and banks won’t lend to them. If you are in this group or an investor who needs money fast, a hard money loan may be your option.
A Hard Money Loan is a Type of Real Estate Loan
A conventional mortgage is one offered by banks with specific terms and 15, 20 or 30 years to repay. The conventional loan is given by credit unions and banks. A hard money is different. It is a private, short-term loan offered by investors and lending companies. Their specific terms may vary and two to five years to repay. Borrowers seeking hard money loans should know which type of loan they want such as:
• Owner-occupied loan for borrowers who can’t get a traditional mortgage and want to live in the property.
• Fix-and-flip loan for borrowers who plan to rehab their property, then quickly sell it to repay the loan.
• Construction loan for real estate borrowers who need to quickly get started on a new construction project with the goal of refinancing or selling the property quickly.
• Bridge loan for borrowers who want to quickly purchase a property with the goal of selling it or refinancing it. Their immediate goal for the property is to allow someone else to purchase a new property now, before getting the proceeds for a currently owned property.
Hard money lenders do consider the same requirements as banks such as credit scores, debts and income. However, the lenders do not make their decisions solely on those factors alone. They are more interested in basing their approval on the value of the property that’s put up for collateral.
Terms of a Hard Money Loan in Fullerton
Another difference between hard money loans and traditional mortgages is flexible terms. Hard money lenders will generally work with borrowers to create terms that work with their finances. This is known as a customized hard money loan. The loan does include an interest rate. The interest rate is typically higher than mortgage interest rates.
The number of payments for hard money loans varies. However, all hard money loan terms include a balloon payment. This payment is the last payment and includes the balance of the loan and any interest or fees on the loan. Some hard money lenders do not allow a borrower to pay the balloon payment early without paying an additional fee.
Down Payment Needed for a Hard Money Loan
One requirement to secure a hard money loan is a down payment. Hard money lenders require a borrower to have a 20 percent down payment to secure their loan. The down payment depends on the value of the property or the value after the repairs are completed. For example, a property valued at $200,000 will require a $40,000 down payment to secure the loan.
Obtain a Hard Money Loan for Your Fullerton Property
It’s time to let the banks and credit unions stop holding the financing. If you need money fast for an investment property or looking for a way to obtain financing for a home, contact us. As a hard money lender, we are ready to assist you in financing your investment with a hard money loan. Contact us today.
If you’re thinking about buying a piece of property in California, you could be wondering how you can take out a loan so that you can make the purchase. For example, after doing some serious research, you might have decided that you want to invest in “fix and flip” properties. For many people, hard money loans are helpful for the real estate investment process. Learn a little more about this exciting borrowing opportunity here, and you’ll be glad you did.
What are the Different Types of Hard Money Loans?
There are a few different types of hard money loans, including bridge loans, fix-and-flip loans, owner-occupied loans (although these are less common), construction loans and more. A hard money lender can help you determine which type of loan will be best for you based on your situation and the property that you want to purchase.
How Do Hard Money Loans Work?
Hard money loans are usually short-term loans that are often fairly easy to get approved for. You may only have to make interest-only payments in the beginning, or you might not have to make any payments at all until the end. Then, you may have to make a balloon payment to cover the entire amount of the loan.
Top Benefits of Taking Out a Hard Money Loan
A few of the benefits of hard money loans are listed here:
- They’re often easier to qualify for. Although your credit score will be checked, hard money lenders usually aren’t as picky as mortgage companies are.
- They’re fast, which usually isn’t the case with a mortgage. This helps if you have found a great deal on a property and want to snap up the deal before someone else does, which is a common scenario for real estate investors to find themselves in.
- They have shorter loan term lengths that can encourage you to pay off the property more quickly, although you will need to be prepared for this.
- They can be used to purchase distressed properties, since you usually don’t have to worry about the property passing a home inspection. Many mortgage companies, on the other hand, do have this requirement.
The Disadvantages of Taking Out a Hard Money Loan
Of course, there are some cons to these loans, including:
- You may have to pay a higher interest rate, particularly if you don’t have good credit.
- You may not be able to use a hard money loan to purchase a property that you are actually going to live in. These loans are usually used for investment properties.
- Loan terms are usually short, so payments can sometimes be high.
Tips for Taking Out Your First Hard Money Loan
If you have learned a little more about the pros and cons of taking out a hard money loan and have decided that this type of lending is right for you, consider these tips:
- Borrow from the right lender. It’s best to borrow from a hard money lender that has a good reputation and that has been in the business for a while.
- Be aware of interest rates. If you have a lower credit score, you may have to accept a higher interest rate on your loan. However, you should still compare rates and look for the best interest rate that you can find.
- Pay attention to the repayment terms. For example, many hard money loans come with shorter loan terms. Additionally, there are cases where these loans require a balloon payment at the end of the loan term, and you will need to be prepared for that if that is the case.