Santa Clara is one of the most popular places to live, work and play in California. The area is home to Silicon Valley, which is one of the economic centers for high technology. It seems that Santa Clara would be an easy place to secure a standard mortgage for a home or investment property.
Unfortunately, that’s not always the case. Banks and credit unions are stingy when it comes to financing real estate opportunities. They want to solely focus on factors that are negative for some people such as a credit history, debts and income. Many people with credit score issues, low income or high debts often are locked out of the Santa Clara, California real estate market unless they explore other opportunities. One opportunity is a hard money loan.
What is a Santa Clara Hard Money Loan?
A hard money loan is a private, short-term for real estate to purchase a home or investment property. The loan is only for a short period of time. For example, the most common hard loan is repaid within 12 months. However, every hard money loan is different. Some borrowers may have two to five years to repay the loan. Regardless of the number of months to repay, every borrower must make one balloon payment due at the end of the loan. The balloon payment includes the remaining balance, interest and any other fees left on the loan.
Down Payment is Required for a Hard Money Loan
Whether a borrower is going for a construction hard money loan to finance a project or an owner-occupied hard money, a down payment is required. The specific amount is determined by the value of the property or after repair value of the property. A hard money lender will based the down payment amount on the full property appraisal.
Some Pitfalls of a Hard Money Loan
Every type of loan has some disadvantages, hard money loans aren’t immune to disadvantages. For instance, interest rates on the loans are higher than traditional mortgage loans. Also, there is an array of fees such as underwriting fees, origination fees and early payment penalties. Hard money loans are also short-term financing solutions.
Advantages May Outweigh the Disadvantages with Hard Money Loans
Borrowers typically consider hard money loans because of specific factors that prevent them from getting a traditional mortgage. For instance, they have a poor credit score. A poor credit history is a barrier to obtaining a mortgage. Hard money lenders don’t focus on credit scores.
Another advantage is financing. Typically, borrowers who seek hard money loans can’t get financing from any other type of lender. Obtaining a hard money loan allows a borrower in this situation to obtain the needed financing for their project or home.
Fast money is another advantage of a hard money loan. A borrower is able to get needed financing immediately. Sometimes the loan application is completed within less than a week after applying. This is a definite advantage when a borrower needs money fast.
Get Your Hard Money Loan in Santa Clara, California
Every financial situation is different. That’s why many people don’t qualify for a standard mortgage with their cookie-cutter requirements. If you can’t qualify for a traditional mortgage or need money immediately for real estate purposes, you have options. One option is to apply for a hard money loan. The terms are often flexible and some lenders customize loan terms, according to a person’s financial situation. Yes, there are disadvantages to hard money loans such as it being a short term solution. However, it is an important to pursue when other lenders won’t finance real estate. Contact us for information about your hard money loan today.