Hard money loans are short-term lending agreements backed by the collateral of an asset, like a home. They differ from other kinds of real estate loans in their length and approval process.
Importantly, investors can be approved for hard money loans regardless of their credit profile. You just need an asset that’s worth enough to act as collateral for the desired loan amount. If you have that, you should get approved.
Read on to learn more about the terms of these agreements and how to decide if they’re right for you.
Technical Aspects of Hard Money Loans
Qualifying for a hard money loan is easier than qualifying for a mortgage. You only need to be willing to collateralize the loan with your property.
Typically, you can borrow up to 65% to 75% of your property’s value. Loan terms are short — generally six to 18 months. This is why hard money loans typically have a higher interest rate than traditional real estate loans.
So as an investor, hard money loans give you short-term funding with minimal approval criteria. This makes them especially popular for short-term development projects and renovations. However, you can use them for any project you’d like.
Are Hard Money Loans Right For You?
The first factor to consider is why you need the loan. If it’s to complete renovations within the next few years, a hard money loan could be a good option. Investors use them for a wide variety of real estate projects, including multifamily investments and ground-up construction.
One of these loans could be right for you if you’re looking for the following benefits:
- A faster, easier approval process
- More flexible loan terms
- The funding to fix-and-flip properties quickly
Hard money lenders typically start by assessing the value of the property you use to secure the loan. They look at comparable property prices in the area and consider the value of your proposed renovations to figure this out. Lenders also verify that there’s a viable way for you to pay off the full hard money loan within the specified time frame.
Assuming you pass these checks, you should qualify for the loan. At that point, the lender presents their terms. These will include your payment timeline, origination fee, and other important details. For example, you may be able to make interest-only payments until your final due date.
Want to learn more? Get in touch with Dominion Financial. We can walk you through the hard money lending process and show you how to use these loans to achieve your real estate investing goals.
Choose Dominion Financial for Your Lending Needs
A major part of making hard money loans work for you is choosing the right lender. You want a partner you can count on for the best terms and interest rates. That’s why Dominion Financial exists.
We pride ourselves on offering some of the best hard money loan terms and rates in the industry. For example, we offer up to both 100% acquisition and 100% LTC loans. This makes it easy to get all the funding you need to bring your next real estate vision to life.
Get in touch to learn more about what Dominion Financial can do for you.
