The term hard money loan creates a bad first impression, but these loans have some crucial benefits. This alternative lending option can help you get your property investment project, or business, off the ground. When you can’t get a mortgage to purchase your future money-making property, hard money loans can make your investment work.
Hard Money Loan Definition
Hard money loans are tailor-made for real estate investors and offered by investors or alternative lenders, rather than traditional banks. Hard money loans are backed by the income property you’re buying–and don’t rely on your credit history or credit score.
Hard money loans may be your solution when you want to:
- Fix and flip an investment property.
- Rehab a home with equity, for sale, to avoid foreclosure.
- Get a short-term loan with a poor credit score or no credit history.
- Get a home loan with no down payment required.
- Switch to a traditional mortgage soon.
Hard Money Advantages
As a real estate investor, hard money loans offer you:
- Fast mortgage loan: In real estate deals, you need to move fast to get the best opportunities. Traditional lenders, such as major banks, can’t move that fast.
- Higher Loan Amount: You may be able to get the full purchase price of the investment property, with no down payment and no monthly mortgage insurance payment. (You would have to pay the loan origination fee and pay interest monthly until the loan is completely paid off.)
- Build a partnership: If you pay back your hard money loan on time or early, your hard money lender may be there for you in the future. The lender may also offer you better terms, or quicker funding, in future loans.
- Get your property investment business off the ground: After you’ve got your business rolling with a good track record, you could potentially qualify for a business line of credit, or other (lower interest rate) financing options, for future investment property purchases.
Contact Norus Capital to learn more about hard money loans and other alternative financing options today.