“This is a real-estate-driven economy from top to bottom,” says Christopher Thornberg, leading economist and Director of the UC Riverside School of Business Center for Economic Forecasting and Development. So that would make mortgages the cornerstone of the current economy. Today, traditional lenders must abide by strict regulations. Finding mortgages to buy, refinance, or renovate real estate is not as easy as it was just over a decade ago. This is where the hard money becomes a mortgage loan advantage.
If you want to get ahead, or even maintain your position, then you need financing. Previously, many consumers viewed hard money lenders as untrustworthy loan sharks, but times have changed. Banks haven’t been lenient about their terms since before the crash. With statistics showing the average home sale closing in around 73 days, time is of the essence when it comes to buying.
What is the Mortgage Loan Advantage with Hard Money?
Veteran real estate investors already know the mortgage loan advantage they are gaining with a hard money loan. However, if it’s your first time, or you’re buying a home to get into the flipping market estimated at $58 billion, then it’s best to arm yourself with some facts.
Gaining Approval and Funding Quickly
One of the biggest mortgage loan advantages that taking a hard money loan will give you is that it’s a quick process. In some cases, with one individual lender, you could be looking at just a single day. But that’s usually if you are very experienced.
Hard money mortgage providers look at the value of the asset. That’s the property that is backing the loan. They don’t care about your credit rating. If you have provided evidence that this is a good investment, they’ll move quickly. Having access to funds this quickly is an important asset for real estate investors in escrow. Some find that their original lender pulls out or simply doesn’t deliver the funds. A hard money lender can step in to provide the cash and make the deal go through.
When you consider that a normal mortgage provider can take around two or three months to extend credit, waiting less than a week will seem like a dream come true. It also means you can get moving faster.
More Financing Available: A Mortgage Loan Advantage
If you apply for a mortgage with a traditional lender, you’ll need to put down up to 20% of the asking price of the property. This will mean that you get better terms on the loan, but that may not be what you want, especially if you’re renovating. Who wants to pay for a renovation five years after it’s taken place?
A hard money mortgage will have shorter terms, but it is possible to borrow against the anticipated value of the property after the renovation. This changes things! You may be able to borrow 100 percent of the purchase price.
A Hard Money Mortgage is Good for Your First Investment
If you are just starting out as an investor, a hard money loan can allow you to purchase property with a minimal amount of your own capital. As long as you present your research on the investment, the hard money mortgage loan provider can also verify that it’s a good investment. With this support, you are at an advantage, as you can quickly start on that project you’ve had your eye on.
Help You Build a Relationship
If you establish a relationship with a hard money lender, this will give you a mortgage loan advantage when you choose to invest again. All you need to do is honor the terms of the contract and pay back the loan on time. Good relationships between hard money lenders and clients can mean that the lender extends more financing, reduces origination fees, and achieves shorter approval times.
Contact a Hard Money Mortgage Provider
Whatever your investment goals are, having a mortgage loan advantage will always stand in your favor. Hard money loans are pretty effective when it comes to the real estate market, which can move fast. Check real estate groups and social media real estate forums to discover hard money mortgage providers in your area.