The real estate market in Round Rock is hot, so it makes sense to jump in and take advantage of the tremendous money-making opportunities that are currently available. While some of the investment scenarios are traditional and are well-suited for bank financing, numerous lucrative opportunities require a more creative approach. Financing a real estate investment enables you to leverage your purchase, and this is one of the great benefits of this type of investing. However, not all financing scenarios are the same, and traditional real estate loans are not right for every borrower or for every property. With this in mind, it makes sense to take a closer look at what hard money loans are and how they work. By doing so, you will have a better idea about when applying for a hard money loan from Delancey Street makes sense.
How Hard Money Loans Work
A hard money loan is an alternative to traditional real estate financing. When you apply for a traditional real estate loan, the underwriting team looks at your financial ability to repay the loan. This means that your credit rating, income versus expenses and liquid assets are less significant than the value of the real estate and the overall merits of the transaction. Hard money loans are commonly used as bridge or interim loans, which means that they are short-term loans that are used to reposition the property until it can be sold or until it qualifies for a traditional bank loan. They are also used for construction loans, fix-and-flip scenarios and even owner-occupied loans when the borrower lacks qualifications required for a traditional real estate loan.
The Benefits of a Hard Money Loan
Before deciding if you should apply for a hard money loan for an investment in Round Rock, Texas, take time to explore the many benefits associated with this type of loan. A hard money loan usually has a short term, which may range between 12 and 36 months in many cases. In addition, you may be able to set up an interest-only loan or a loan with a balloon payment. This can create very affordable monthly payments. Furthermore, lending requirements are usually straightforward and may be much less tedious to meet than traditional real estate loan requirements. Another important benefit of a hard money loan is that the processing and underwriting timelines are much shorter. In fact, you may be able to close on a hard money loan within a week or two in some instances. Your hard money lender may also be more lenient and flexible with regards to loan terms than a bank may be. As you can see, there are numerous benefits of a hard money loan, but you will need to analyze your situation carefully in order to determine if applying for hard money financing is the right move for you to make right now.
When to Use a Hard Money Loan
Because of the unique features and benefits associated with a hard money loan, they are often used in specific types of lending scenarios. For example, many people use them as construction loans. They are also used when incredible investment opportunities are available and when a quick closing is required. A hard money loan is most commonly used when traditional financing is not available. This may be because the property or the borrower will not qualify. Before applying for a hard money loan, keep in mind that this is short-term financing. You should have a realistic plan to sell or refinance the property before the hard money loan’s term expires.
Delancey Street is your trusted source for hard money loans in Round Rock and throughout the area. To inquire about loan terms that may be available for your scenario, contact us today.