What is a hard money loan? These loans are typically short-term loans, that borrowers utilize to finance or refinance the purchase of real estate investments. Carlifornia Hard Money Direct is one of the many lenders you might turn to when applying for a loan in California. But, before you apply for these loans, you must understand some important factors regarding borrowing. For starters, you’re paying a high-interest rate, and repayment terms are often short. A high return for lenders means you’re paying a higher interest rate. However, credit checks are not run, and as long as you have real estate (security) to back the loan, you’ll be approved.
When should you use hard money loans?
If you’re considering applying for a hard money loan with Carlifornia Hard Money Direct, or another lender, when should you consider this option as opposed to a traditional bank loan? Here are some situations in which you might choose to apply for a hard money loan.
- Purchasing property in need of major repair work
- If you’re a house flipper, this is a great way to put capital into the home, repair it, and improve it immensely, so you can turn around and resell for a huge profit.
- You don’t have the best credit
- If you own or plan on buying real estate/investments, but don’t have the best credit score, many banks aren’t even going to sit down to talk to you. Especially if you need to borrow a high amount of money for your investment. Hard money lenders will help you finance your purchase and lend you the money you need to invest.
- Shopping in foreclosure
- Many buyers are making cash offers in foreclosure sales. If you can’t compete, or can’t match a cash offer, a hard money loan is a great way to get your hands on some additional capital. It will allow you to outbid other buyers, perform necessary repairs on the home (investment property), and turn around and flip it for a profit down the line.
Of course, these aren’t the only instances you might apply for a hard money loan, but some of the main reasons you might want to consider applying for one. Before applying, make sure to talk to multiple hard money lenders. Know the terms, repayment terms, interest rates, and ask the right questions before signing any documents. Doing so will guarantee the best option for you, and ensures you won’t get into a situation where you can’t repay the loan.