Those who secure funding using residential hard money loans obtain the financing through equity, not creditworthiness. Traditional mortgage loans require a lengthy process that includes extensive documentation and a credit check.
Hard money loans offer shorter terms, often from two to five years. These loans carry higher interest rates and processing fees. However, they are often worth these costs in a variety of cases. People seek these loans because they do not qualify for a conventional loan or because they need the money faster than a traditional loan can offer. Residential hard money lenders can disperse funds in a few short weeks and, in some cases, days.
Many types of situations call for this type of loan. People who use this type of financing include property flippers, borrowers who do not qualify for traditional loans, and homeowners facing foreclosure with substantial equity in their homes.
Hard money loans can be a useful tool or they can be an expensive error. The loans are considered, by financial experts, to be a short-term solution, not a replacement for a traditional mortgage. These loans present many advantages such as accessibility, quick availability of funds, and less stringent financial requirements – no credit check and fewer financial documents.
The loan terms can be quite flexible, especially if the borrower has collateral or equity in their home. Hard money lenders are known to be more flexible than traditional mortgage lenders.
Borrowers should remember the risks associated with hard cash loans. These risks include higher interest rates and increased processing fees. There may be penalty for paying the loan early, and the down payment may be as high as 30% of the total value of the loan.
When it comes to securing funds for a residential property, a hard cash loan may be the way to go. By using a private service lender, the borrower may be able to conduct business more quickly, which is especially useful for investors and property flippers. Lending Universe brings customers many options in securing financing. Contact the firm today for more information.
Company Name: Lending Universe