5 Reasons You Need a Hard Money Loan (To Buy A House)
In today’s competitive real estate market, a hard money loan can give you that competitive edge to buy an investment home.
A hard money loan is a great way to get the home you want without having to wait for conventional loans. The hard money loan can provide you with all of the cash needed to buy the house, without too many hoops to jump through, such as proof of income, or credit checks.
Hard Money Loans Facilitate Cash Deals
Cash is king in a competitive real estate market. Oftentimes, the seller will accept a cash offer over one that needs traditional financing. Hard money loans come with quick processing times, which is quite the opposite of a traditional mortgage.
You Don’t Have to Have Great Credit
One of the main benefits of hard money loans is that many hard money lenders will not perform credit checks or have the typical bank, qualifying standards, so they can be a good option for people who don’t have an extensive personal credit history or have poor credit.
It’s also harder to get rejected when applying for hard money loans because they’re based on physical collateral such as property equity and not always on paper qualifications such as credit scores or income.
You Need to Close Your Loan Fast
Hard money loans can close in as fast as 24 hours. Instead of getting an appraisal which can take weeks, most hard money lenders will use a broker’s price opinion of value (BPO) to gauge the true market value of the property being purchased. You can get hard money loans in as little as 24 hours, but you need to have the property under contract and a pre-approval with a hard money lender.
The Lost Opportunity Cost of Not Doing the Deal
When you’re considering a hard money loan to buy a house, it’s important to think about the opportunity cost of not doing the deal, rather than looking at the interest rate or loan fees. The opportunity cost is the amount of money you could lose by not buying the property.
For example, if you have the ability to make a $50,000 profit on a fix and flip, is it worth the cost of paying 3-4 months of interest? Many successful real estate investors certainly think so!
You Don’t Want a Partner
When you’re flipping a property or buying a property to rent, you don’t want, or need, a partner. You’re the one in charge, and you’re the one who’s going to make the decisions. If you have a partner, you’ll have to split the decision-making and the profits (or losses).
With a hard money loan, you’re the one in charge. You can make the decisions about what properties to buy, how much work to do on them, and when to sell. You don’t have to worry about someone else making decisions that could hurt your bottom line.
Hard money loans are great because they come with quick processing times and often, no credit checks. They can also close in a matter of days sometimes, which means you don’t have to wait weeks or months to close on your deal. A hard money loan might be the perfect solution if you’re looking to purchase a house on your own terms, without having partners, or needing any other type of financing. You just need a good property with equity that can serve as collateral for the loan.
Let us know how we can help! We’ll work closely with you every step of the way so that this process goes smoothly. Reach out to us today to get preapproved to buy your next investment property!