Hard money loans are short-term loans used to fund real estate properties. These loans are popularly used for real estate transactions and involve using the property as collateral. Generally, these loans are secured from private hard money lenders rather than traditional lenders like banks or credit unions.
If you’re considering acquiring a hard money loan, learn more about these loans through this blog.
Hard Money Loans Aren’t Tough to Qualify for
Apart from the benefits of hard money loans, the reason why hard money loans are popular is that they’re easy to secure. Most individuals often fail to obtain loans from traditional lenders because they fail to meet the criteria. As a result, individuals with poor credit scores are often deprived of such financing. Luckily, hard money loans don’t have such rigid criteria; they offer loans to individuals whose real estate ventures have some potential.
The Lender Won’t Offer Cash At the Closing Table
Contrary to popular belief, you won’t be getting any extra cash at closing—hard money loans don’t work that way. When you buy a property through these loans, you need to sign a legal contract at the closing table while using the property as collateral for home rehab funds. In case you default, the lender will seize the property.
You Receive Payouts When You Rehab the Property
Most individuals expect that they’ll receive early payouts with hard money loans. Unfortunately, that’s not the case! Hard money lenders offer payouts after every stage of your project until it is complete. Remember to keep a minimum of 10 to 20% of the rehab fees ready to pay the contractors.
Your Payouts Depend on an Inspector’s Approval
When you want to receive your hard money loan payouts, you need to contact your respective lender. Once you reach out to your lender, they hire an inspector to evaluate your work, ensuring you wrap up your work before the lender offers you the capital.
When your application is approved, the lender will reimburse you for the labor and materials you paid for yourself. You’ll also have to pay an inspector charge, varying from $150 to $300 per visit.
A crucial thing to know about hard money loans is you shouldn’t skip your payments. Hard money lenders need monthly payments until the property is refinanced or sold out. Therefore, make sure you make timely payments, otherwise it can lead to late fees and higher interests.
Acquire Your Hard Money LoansToday WithOur Hard Money Lenders!
Are you looking for hard money lenders to securea hard money loan? Look no further than Insula Capital Group!
Insula Capital Group is a leading private lending company offering various hard money loans. Our hard money loans are applicable for all real estate projects,such as fix and flip projects, land development, buy and hold, new construction, etc.
Get in touch with us to request a quote today!