Is A Hard Money Loan Right For You?
If you need to borrow money for a personal reason, you're probably in the process of exploring your options. For many borrowers, a hard money loan is a good choice for securing cash that can be used for just about any reason. This means you can use the money to pay off debt, buy groceries, or even take a much-needed vacation. Before you apply for a hard money loan, however, there are some things you need to know.
What Is a Hard Money Loan?
Start by understanding the difference between a hard and soft money loan. Specifically, hard money financing refers to a loan that is secured by real estate; this means that your home or another piece of real estate that you own is essentially placed as collateral for the money you're borrowing. A soft money loan, on the other hand, requires no collateral.
For many, the main draw of a hard money loan is the fact that putting down real estate as collateral can help you secure a lower interest rate on the loan itself. In this sense, you can save a pretty penny when all is said and done and your loan is paid back. The specific terms of a hard money loan can vary greatly, but you can generally expect to have anywhere from a few months to a year to pay it back.
Considerations for a Hard Money Loan
If you're considering a hard money loan, start by asking yourself what property you have to place as collateral on the loan. You'll need to make sure you can obtain a copy of the title, as this will be required by the lender to process and approve your loan. Keep in mind, too, that the amount you'll be able to borrow will likely be based on the value of your property.
Qualifying for a Hard Money Loan
While your credit score is less of a factor in a hard money loan versus a traditional loan with no collateral, you'll still need to meet some basic requirements to qualify for such a loan. For example, some lenders will not work with borrowers who have any recent foreclosures or short sales on their record.
These are just a few considerations to keep in mind when it comes to taking out a hard money loan. Overall, this borrowing option can be a great choice for those who want to secure the best interest rate by placing a property down as collateral on a loan.
To learn more, reach out to companies like Axe Lending Group.