What is hard money? When it comes to real estate this type of lending can facilitate the dreams of people that would not qualify for a bank loan. Potential buyers need to know how to choose a commercial hard money lender using common sense.
Since the market crashed eight years ago, lenders have become increasingly stringent in the standards that borrowers must meet to have a mortgage loan approved. Many, many people who once had excellent credit scores find themselves in the fair or poor categories. Even with a good, reliable income consumers with fair to poor credit scores will not qualify for a traditional mortgage loan.
HMLs understand that people without excellent credit scores can still be a good business investment for the company. The borrower and the lender both come out ahead. The company ofter offers a transitional financing. A potential buyer who does not have a down payment or an excellent credit score, can use the HML to get into the property then refinance when the time is right. Equity and a good payment history will make the home owner more attractive to traditional lenders.
You may be thinking that the interest rates are cost prohibitive, but the rates are reasonable. It was not that long ago that banks were charging ten to twelve percent for adjustable home loans. It is possible that the cost of the mortgage with an HML will be within this range or only slightly higher.
Whether you are in the market to buy a family home or to acquire a house that needs renovation, then quickly sell it for profit, an HML backed mortgage can finance your dream. The interest rate may be as low as nine percent or as high as eighteen percent. Various factors will contribute to the cost of the loan. If you plan to keep the property for a year or more before selling or refinancing, your rate will be lower. The quality or potential quality of the property may affect the rate.
Often buyers find that a local company or individual with a connection to the community will be flexible and more buyer friendly than a corporate HML. The rule of thumb is the bigger the company the harder it may be to qualify. If you are short on cash HMLs will back one hundred percent of the mortgage. Your best chance may be local.
The high cost of rent may be what keeps people from being able to save for a down payment. Renting has none of the tax benefits of home ownership. Take the time to do your homework to find a reliable lender. Check their business ratings and the comments on social media. Your impossible dream has just become possible.
Since the market crashed eight years ago, lenders have become increasingly stringent in the standards that borrowers must meet to have a mortgage loan approved. Many, many people who once had excellent credit scores find themselves in the fair or poor categories. Even with a good, reliable income consumers with fair to poor credit scores will not qualify for a traditional mortgage loan.
HMLs understand that people without excellent credit scores can still be a good business investment for the company. The borrower and the lender both come out ahead. The company ofter offers a transitional financing. A potential buyer who does not have a down payment or an excellent credit score, can use the HML to get into the property then refinance when the time is right. Equity and a good payment history will make the home owner more attractive to traditional lenders.
You may be thinking that the interest rates are cost prohibitive, but the rates are reasonable. It was not that long ago that banks were charging ten to twelve percent for adjustable home loans. It is possible that the cost of the mortgage with an HML will be within this range or only slightly higher.
Whether you are in the market to buy a family home or to acquire a house that needs renovation, then quickly sell it for profit, an HML backed mortgage can finance your dream. The interest rate may be as low as nine percent or as high as eighteen percent. Various factors will contribute to the cost of the loan. If you plan to keep the property for a year or more before selling or refinancing, your rate will be lower. The quality or potential quality of the property may affect the rate.
Often buyers find that a local company or individual with a connection to the community will be flexible and more buyer friendly than a corporate HML. The rule of thumb is the bigger the company the harder it may be to qualify. If you are short on cash HMLs will back one hundred percent of the mortgage. Your best chance may be local.
The high cost of rent may be what keeps people from being able to save for a down payment. Renting has none of the tax benefits of home ownership. Take the time to do your homework to find a reliable lender. Check their business ratings and the comments on social media. Your impossible dream has just become possible.
About the Author:
Tom G. Honeycutt is a full-time real estate entrepreneur in Atlanta, GA. Tom helps readers by providing practical and useful knowledge to better understand lending choices. If you are looking for Commercial Finance Broker Company | Atlanta, GA He suggests you check out the website iFund International.
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