Hard money loans are quite a bit different than other loans you’ll see in the housing market like conventional or FHA loans. These types of loans are often used for short term investment purchases where traditional financing options may not be available.

Hard money loans are not like traditional loans that focus on the buyer’s credit. These types of loans are offered based on the value of the property being financed. Hard money loans are generally short-term loans with higher interest rates than traditional mortgages and are offered by private lenders. Buyers with poor credit who can show their ability to repay the loan in other ways may also look to hard money loans for more traditional home purchases rather than investment opportunities.

Is a Hard Money Loan Right For Me?

Fixing and flipping homes has gained a lot of popularity and with that hard money loans are more popular as well. If a home is to be purchased for a flip, it would make sense to both the buyer and lender to use the home as a collateral because both parties want to flip the house as fast as possible. The sooner the house is fixed and sold, the sooner both will profit.

Another reason hard money loans can be beneficial to some buyers is because they don’t have to go through as many steps to get the money. A private lender doesn’t have to abide by as many regulations, so they can decide on if they want to lend the money based on whether they find the venture to be in their best interest and how soon they will expect to get a return on that investment.

Hard money loans can also be tailored to a certain person or situation. If you find yourself in a particular market or situation, you may be able to set up a personalized loan and payment schedule unlike a standard loan through a traditional bank.

Even though hard money loans can be a good alternative for a short-term lending situation or work well for a fix and flip, they are not always the right decision. It’s important to evaluate why you need the money and how soon you can repay it, when considering a hard money. It can be costly since the interest rates are higher than average, so it is best to research other loan options and compare what it will cost you in the end and determine if it’s an affordable option for you.

Hard money is not perfect. While it seems simple – an asset secures the loan so everybody’s safe – hard money is only one option. It can be expensive, so things have to work according to plan for profits to materialize.

Reach Out Today!

If you are considering investing in property or need a short-term loan, a hard money loan many be the right choice for you. Contact JZ Mortgage Services in Bradenton, FL to discuss your options today.