Lakeland-Florida Hard Money Loans
Once you decided that getting a hard money loan is the way to go, you need to figure out the best way to make yourself look good to a hard money lender. Understanding exactly what hard money loans are and how they’re giving out will help increase your chances of obtaining one.
What is a hard money loan?
A hard money loan is essentially a short-term loan that is backed by real estate. It is used by investors who are interested in buying every having properties, construction companies that are doing major bills and other people interested in the short-term real estate market.
How do you get approved for a hard money loan?
It’s relatively easy to get approved for a hard money loan in comparison to getting approved for a traditional loan. Hard money lenders are interested in the collateral that you’re bringing to the table. This collateral could be a house that you already own or the property that you’re planning on rehabbing and reselling. Traditional lenders are concerned with the amount of credit that you have, your credit history and credit score, foreclosures, bankruptcies and anything else on your record that could give you a negative credit rating.
What do you need to bring to the table when applying for a hard money loan?
When praying for a hard money loan, there are several things that you need to bring to the table in order to help ensure that you get approved.
Solid Business Plan
Even though hard money lenders have much more relaxed criteria than traditional lenders, they still want to make sure that you have the ability to pay back a loan when it’s due. Presenting the lender with a concrete business plan can help ensure and reassure them that you have the ability to pay. For most people, proof of the ability to pay will be the sale of the property that they’re planning on rehabbing.
Most hard money lenders require you to bring a down payment to the table, so figure that into your expenses. Hard money lenders willl base the amount of money they’ll loan you on the value of the property that you’re using buying. Your down payment will be most likely be a percentage of the property value when you buy it, or they’ll base it on the value the property will have once it’s been rehabbed (the “after repair value, or ARV).
What sort of interest rate are you looking at with a hard money loan?
Hard money lenders tend to charge high interest rates for their loaloans, usually ranging from 5 percent to as much as 15 percent or higher. You need to check with the hard money lender that you’re interested in dealing with to find out how much interest you’ll be expected to pay. Hard money lenders charge higher rates for their loans because they’re taking on a greater amount of risk to lend you the money than other lenders would.
How do you find a reputable hard money lender?
There are plenty of hard money lenders out there, and you want to make sure that you are selecting the right one for your situation. Do a Google search of hard money lenders in your area to get an initial list. Next, reach out to other real estate investors in your area by joining groups and going to real estate investment conferences. This is a great way to connect with people who have experience with good lenders and get solid recommendations. You can also search on forums like Bigger Pockets to find a host of great information for investors who’ve been in your shoes.