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Things You Need To Know About Hard Money Loans One of the major challenging tasks that investors tend to face is to find a reliable financing to be used for their projects. It is necessary for rehabbers to secure the capital first before they can start home renovation for eventual rental or sale, and to be able to acquire the property, cover the listing fees, pay contractors, and many other expenses. Majority of these fix-and-flip investors would prioritize securing hard money loans in order for them to successfully fund their projects. Hard money lenders are known to be specialized in catering fix-and-flip community and would offer a turnaround that is much quicker and more financing options compared to traditional banks. Below are important things you may want to keep in mind when it comes to hard money loans. Hard money loans have higher rates but shorter terms compared to traditional bank loans. You should know for a fact that hard money lenders offer different terms. However, you can be sure that these types of loans have quite a lot shorter terms compared to traditional bank mortgages and they have maturities that would usually range from one to three years. Lenders would know that rehabbers can actually complete their renovation projects as well as having the properties resold before the due dates of their loan and will use the proceeds of the sale as payback for their loans. The loan works with the idea that monthly interest payments are due while renovation is ongoing and principal is due once the home is sold. And because of shorter terms, these hard money loans are expected to have higher interest rates than the traditional mortgages.
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One of the major advantages you can enjoy from hard money loans is that you can gain access to capital a lot faster compared to conventional bank financing. The process involved in hard money loans is quick and some lenders would even provide loan approvals on the same day. Generally, they disperse funds rapidly within days of approval. The fix-and-flip investors are enjoying a distinct advantage on the fast turnarounds on the loans in terms of competition with other buyers for properties. Also, when it comes to hard money loans, lenders will focus mostly on the property’s value and not so much about the wealth of the borrower. There’s still a good chance for rehabbers who have proven skills and would like to finance a desirable property to qualify for a hard money loan even if they have a history of bankruptcy or they don’t have a perfect credit score. You can also enjoy the versatility of hard money loan. Being one of the fix-and-flip investors, you can actually amplify profit opportunities with hard money loans if you cover more types of properties.

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