What Makes a Hard Money Loan a Good Loan?
Hard Money loans are fantastic for short-term usage while investing in real estate. Depending on how it’s structured, a Hard Money loan can be available for as short as 3 months to as long as 5 years or longer. Traditional mortgage lending is often available for 10 years to up to 30 years. The real catch is when attempting to obtain a traditional mortgage on a distressed or vacant property. It is extremely difficult to qualify and you will have a hard time finding a bank who will loan in this situation. Enter Hard Money.
Here’s a good example:
- An investor finds a home they’d like to purchase for rental purposes
- The home is distressed and in need of major repairs
- A bank won’t lend on a property with significant problems affecting it’s value
- This investor has two options:
- Get the loan from a family member or friend.
- Use a Hard Money loan to buy the property. The Hard Money loan can also be structured to cover the cost of the repair needed.
- After the property has been fixed up and prepared for rental, the investor can obtain a traditional mortgage at conventional rates to repay the Hard Money loan.
This is a great example of a short-term Hard Money loan used to purchase a rental property that otherwise would require an all cash offer.
If you have any other questions or are interested in getting a Hard Money loan in Santa Rosa, Sonoma County, North Bay or really anywhere in California, call our office 707-523-2099!
The content of this blog contains general advice only and does not consider individual financial circumstances, desired loan amounts or existing real estate or lending transactions. This information is intended for licensed Real Estate Agents and licensed Lenders/Mortgage Brokers and is posted on our company website and specific blog sites with the express purpose of reaching such licensed individuals.