So, you are in a bind. Maybe money has become temporarily tight. You feel the stress of the unexpected and do not know what to do. Perhaps, you are trying to flip a house that needs a little more work than you originally planned. Now you need the funds to cover you until you can sell the property. Perhaps, you have thought about taking out a traditional type equity loan but, your credit score is not what it used to be. You apply for the loan with hopes that you will be funded.
They start by running your credit report and checking your loan to value. Then, the bank tells you that even though you have enough equity, you do not qualify for any type of traditional home equity loan through their financial institution because your credit is not to their qualifications.
The big banks base most if not all of their decisions around what your credit ranking is. You could have 200% equity and a low score and they may turn you down. You know you can afford the monthly payments once you have gotten out of this bind. But, if the big banks will not lend you the money what other choices do you have?
In another instance, maybe you have the credit score but need the money faster. Hard Money Equity loans are fast funded. This may you can get funded and take care of what you needed the money for.
How Hard Money Equity Loans Can Help
Hard money equity loans may be the right option for your situation. If you have the equity, but your credit score is not enough for the big banks then you can look into Hard Money Equity Loans. Well, what are hard money equity loans? Hard money equity loans are loans you take using the equity on property or properties.
These type of loans are really good when you know you will have a quick return. This way you get the money and pay it back fairly quickly.
Hard Money Equity Loans are done through private parties. With how hard it is to get a traditional loan through your typically big banking establishment, hard money equity loans may become a more sought out type of loan. According to Lending Tree, “One percent of American families applied for personal or family loans in 2017, and 24% of those received at least one denial for their requested loan amount.”
What are the risks of Hard Money Equity Loans
Hard money equity loans often have high-interest rates. These loans have been known to have interest rates ranging in the high 10-15%. This means a higher monthly payment. When taking out the loan make sure it fits your budget. If you are unable to pay it back, there is a lot on stake.
Another thing to keep in mind is that most of these hard money equity loan private lenders will want to be at the first loan position. Rarely will the lender allow their status to be the second on the property. This is their protection in the case that the receiver of the loan defaults on the loan or foreclose.
What are Hard Money Equity Loans good for?
Hard money loans are typically used for the following:
- Construction; maybe you want to add another room, dig a pool, roof repair and so much more. y take out a hard money loan to put into the property they are going to sell.
- Land loans; Buying extra land to build on. Or perhaps, to just widen your current land.
- Quick money; you need the funds right away.
- Bad credit; bad credit makes loans harder to obtain.
- Vacations; You know you have a big vacation coming up and want to make sure you have enough funds to spend and enjoy yourself.
- Renovating; maybe you are not flipping a property but want to just improve the asthetic of your current home.
The Federal Reserve Board offers some great insight into Home Equity including HELOC (Home Equity Line of Credit).
Whatever your need for the extra funds, a hard money equity loan may be the right choice. The loans are quick, easy and readily available if you have the equity.