Topeka is a city on the move, with many great real estate deals making themselves available to those interested in investing. If you are in the area and looking to move on a property, you might not have a lot of time to get in on the ground floor of a great deal. There are also times when you just do not qualify for a conventional mortgage. You might think that there are not any options left for you in such a case, but a hard money loan offered by Delancey Street could be your ticket to closing the deal.
What Types of Hard Money Loans Are Available?
There are actually quite a few different types of loans available using this type of lending. The loan that works for you will depend on a variety of factors and on the type of real estate deal that you are hoping to close. A hard money loan typically has less stringent requirements than other types of mortgages as approval will depend more on the collateral you will have in the building that you are hoping to purchase.
There are four major varieties of hard money loans that you will want to make yourself aware of. The details for each are included below.
- Owner Occupied Loan – These are harder to get, but they will provide you with the money you need to buy a home or building that you intend to occupy on your own. This is useful if you cannot get approved for another type of financing, but the short term nature of the loan often makes it difficult.
- Bridge Loan – As its name implies, this is a short term need for hard money that will get you a property quickly. In return, you plan on either selling it within the year or refinancing it in order to pay back the loan. Alternatively, you might plan on using the proceeds from another property you are selling to raise the down payment you need to qualify for a conventional mortgage.
- Construction Loan – This is the loan you need if you are a developer looking to get a project off the ground quickly. You need access to funds fast because you plan on selling the building just as soon as it is finished. Alternatively, you may refinance the loan within the first year.
- Fix and Flip Loan – This is a popular type of hard money loan that is geared for investors who enjoy buying homes that are a value, and then quickly fixing them up for a fast sale. Once sold, the proceeds are used to pay off the loan.
While these are the main types of hard money loans, there are other varieties as well. You will just want to talk to Delancey Street to determine which type of loan best fits your particular situation.
Why Consider a Hard Money Loan?
This type of loan is geared for the real estate investor who needs access to cash in the short term in order to meet certain obligations designed to build their property portfolio. Because of this, you will find it difficult to get this type of financing if you are wanting to buy a property in Topeka to live in on your own. However, it is possible to do so and this is why you will want to speak to a loan specialist about your particular situation.
A hard money loan is different from other types of property financing because of its short term nature. You will only have a few years at most to pay back the loan. During that time, you will only be asked to make interest payments. Some lenders do not even expect that. You will need to have the loan paid off by its maturity date, which could be as little as 12 months.