Houston’s reputation as a cultural hotspot is growing as fast as its population. Its rapid rise is gearing to overtake Chicago in the years to come to be the third-largest city in the U.S.
Hard money loans are becoming increasingly popular for real estate investors. They can obtain the financing they need to purchase a property quickly and efficiently.
Swapping traditional loans for hard money loans when buying a property in Houston is worth considering. In doing so, you can utilize some of these advantages that come when using hard money loans.
Funded And Approved Quickly
One of the main advantages of using hard money loans is the speed at which they get processed. In some instances, they are processed and approved within one day.
Most hard money lenders will consider the valuation of the property. They will look at the amount of money the investor is likely to raise as part of their equity. What the down payment is and what their exit strategy will be. The exit strategy is in place in case the borrower defaults on loan payments.
In the majority of cases, lenders will approve the loans quickly. They take into consideration the mentioned factors and process the loan even quicker.
Very few real estate investors have experience with hard money loans. When they do, they are amazed at the speed at which hard money loans get approved, especially compared to traditional loans lent by conventional lending institutions.
Function As A Safety Net
Hard money loans are the best choice for investors, especially those who were turned down by their lenders at the last moment. As the time it takes to get approved can take a day, hard money loans are like a safety net for many investors should something occur.
Hard money loans are rescue loans. They help investors to fund their real estate properties in desperate times and cases of emergency.
Fewer Requirements For Hard Money Loans
There is no long list of eligibility requirements for a loan with hard money loans. In most cases, the lender will be able to approve and finance quickly and successfully.
Traditional loan lenders, such as banks, will have a list of eligibility requirements. Additionally, banks can take a long time to approve the loan request of the borrower.
Having an excellent credit score is usually one of the top loan eligibility requirements that most banks demand borrowers to have.
There is an endless list of limitations and restrictions banks, and traditional loan lenders have. Many of these restrictions are non-existent with hard money loans. As such, hard money loans are considered the go-to loan in many circumstances.
Helpful For New Investors
For those new to the property market, hard money loans are a great option. They allow you to purchase property despite you only having limited funds. After you have established a name for yourself as a trusting investor, you could be able to secure a line of credit from a bank.
Don’t Have To Worry About Credit Score
Hard money loans are a great option for those wanting to avoid using traditional lenders to help fund their property investment. If you have a low credit score, it can be difficult to obtain a loan from a traditional lender. Using a hard money lender in Houston, like Larry The Lender, is a great way to take advantage of the amazing property opportunities available.
Ability To Borrow More
Many traditional mortgages will require that you put down a minimum percentage of the purchase price. On average it is about 5%. Banks will prefer that you put down a higher percentage, such as 20% of the purchase price. If you were to put less than this percentage, you will have to purchase mortgage insurance. In doing so, it will increase your monthly mortgage payment.
Using a hard money loan, your lender of choice might be willing to lend you the full amount of the purchase price. Without a down payment, you would be responsible for only paying the origination fee and the monthly interest. It will be until you have paid the loan off in full.
The Bottom Line
If you are still on the fence about hard money loans, consider speaking with a hard money lender. They can answer any queries you have about the process and what to expect if you decided to go this route. Seeking the help of an expert is one of the best ways to determine what will best work for you.
Hard money loans can be a top go-to option for many lenders. As you move forward, you now get to begin the exciting search for a property and the right lender to help you with your next investment.