Everything You Need to Know About Hard Money Loans in Modesto, California
Hard money loans may be a good option for those who need money fast to purchase real estate. It is a loan for real estate investors that is primarily based off the value of the collateral. Hard money loans do not focus on your ability to repay like banks and other financial institutions.
Hard Money Loan Options
If you are considering a hard money loan, there are many different options that include:
A fix-and-flip loan is for investors who want to buy a property, make quick renovations, and then sell the property to pay off the balance of the loan.
A bridge loan is for investors who want to buy a property quickly with the intention of refinancing or reselling the property. There are times when investors can take out a hard money bridge loan to purchase a property before they can get funds from the sale of another property.
These hard money loans are for individuals who were not able to quality for other finance options. An owner-occupied loan gives an individual the opportunity to purchase real estate for themselves.
A construction loan is for real estate developers who want to start a new construction project. Typically, these investors have a goal to refinance or sell the property quickly.
Because hard money lenders are private firms, they are able to consider a hard money loan on a case-by-case basis, and many lenders are open to issuing hard money loans for a variety of investment purposes.
How Hard Money Loans in Modesto, California, Work
Hard money loans aren’t offered to everyone. Many lenders will not issue hard money loans for non-investment purposes. While some lenders may consider making hard money loans to consumers who want to use it for their private homes, it comes with a number of additional regulations.
Hard money loans are issued over a short time, which is typically less than two years. Most hard money loans have a 12-month term. With a hard money loan in Modesto, California, a borrower will not make equal monthly payments toward the interest and principle. Instead, the borrower will is only responsible for interest-only payments.
What are the Perks of Hard Money Loans?
Real estate investors can take advantage of many perks that hard money loans have to offer. Hard money loans allow investors to get funds quickly so that they have the ability to receive funding in less than a week under certain circumstances. By having access to funds quickly, investors can snag a good real estate investment instead of missing out, which may occur if they go to a bank or other financial institution.
Hard money lenders also offer lenient requirements when compared to banks. Traditional mortgages have strict eligibility requirements that include good credit scores, low debt-to-income ratio, and source of income. While hard money lenders may check credit scores and income, which they are required to do by law, the main factor that determines eligibility is the collateral that is used.
What are the Eligibility Requirements for a Hard Money Loan?
Because the property that is used as collateral is the primary component of a hard money loan, the lender will typically want to have the property appraised. In addition, most hard money lenders will require a down payment. The down payment is usually calculated based on the current value of the property or the after-repair value (ARV).
Would you like to find out more about hard money loans in Modesto, California? We welcome you to contact us at Delancey Street. Our team can provide you with further details about our hard money loan options.