From business and property development to flipping a real estate purchase to investing in a rental, there are a lot of different moves out there worth making in the New Jersey area. But for many in the field, finding the right project isn’t the hardest part – it’s finding the money to back it up.
You’ll have access to many different types of loans, and one that is often overlooked until it’s needed is a hard money loan – sometimes called a hard money loan or a bridge loan. These loans are offered by private lenders and usually don’t require the same kind of credit scores or debt to income ratios that traditional loans have.
So just why do you need a hard money loan? Since they’re easier to qualify for and much faster to receive, a few different uses standout where they’re concerned. The following are some examples of why you may want to consider a hard money loan.
- When you go over budget on developing a property and need extra cash to finish the job.
- When a property is for sale and you need the money fast in order to make a purchase.
- For additional money during a renovation when your construction draw is still weeks away and production is at a standstill.
- When an opportunity is too good to pass up but you simply can’t qualify for a traditional loan at the moment.
Generally, these loans form a bridge between lack of funding and securing a more traditional loan. Since the loan is secured with the property instead of credit scores and similar points, lenders will often offer hard money to you when you can’t access it otherwise.
Hard money loans an integral part of the process of development for many, and as long as you understand how they work they’re something that could be a good call for you as well.