In today’s market there are many choices for business owners to consider when it comes to borrowing. As traditional lenders tighten up their lender policies, hard money lenders step in to help businesses and individual investors meet their funding needs. It is important, however, to make sure you consider some key issues before you choose the hard money lender to fund your project or finance your investment property.
Hard Money Loans are Based on the Value of the Property
The fact that hard money lenders loan money based on the value of the property rather than the credit of the borrower is a great selling point. If you need to increase your cash flow or operating capital but don’t have the credit score necessary to pursue traditional lenders, hard money is the perfect solution to your needs
Hard Money is a Better Choice for Depressed Property
If you are interested in depressed properties hard money lenders in Texas can help you achieve that goal. Unlike traditional lenders that finance 75-80 percent of the appraised value of the property at the time of the loan, hard money lenders will finance 65-70 percent of the property’s projected value after all work is complete. What this means for the potential investor is he may not have to put up any of his own money in order to close the deal on the property, especially if the property is priced appropriately for its condition.
Interest Rates Vary in Different States
Another thing to keep in mind about hard money loans is the interest rates will vary depending where you live. Do not make the mistake of thinking the interest rates are uniform or you will open yourself for a great deal of confusion. In fact, you may find variations among lenders in your own town. This is nothing unique to hard money lenders; even traditional lenders have different rates in different states and even regions.
Hard Money Lenders Prefer Properties Close to their Home Bases
When it comes to hard money loans, lenders prefer to work with properties that are close to their homes or offices. This is in contrast to traditional lenders who really aren’t adamant about staying close to the properties they finance. When hard money lenders in Texas loan money on local properties it allows them the opportunity to help the local economy as well as the business owners and investors who need their services.
Turnaround Time is Shorter than Traditional Lenders
One of the most appealing things about hard money lenders in Texas is the reduced amount of turnaround time compared to traditional lenders. Instead of having to wait up to ninety days to close on a traditional loan, you are usually able to close on a hard money loan in ten to fourteen days. This has several advantages including the fact you can move quickly on a property the owner is seeking to get rid of quickly. It also means you can begin work on a property under renovation much quicker with a minimum amount of red tape. If you’re looking to finance a property quickly without having to worry about your credit hard money is the right choice for you.