Loans can be quite useful when it comes to navigating your personal finances. In fact, they can be used for a variety of reasons, such as debt consolidation, emergency expenses, or any other large purchases. Now, keep in mind that there are different types of loans, but the one we’ll be discussing today is the hard money loan.
In this article, we will share all you need to know about hard money loans so that you can make well-informed decisions!
Hard Money Loan, Explained
Hard money loans allow borrowers to take out loans without going through traditional lenders. On top of that, hard money lenders allow borrowers to borrow money, with the only requirement being that they put up physical property as collateral. Individuals with bad credit histories often utilize hard money loans because they are unlikely to be approved.
When it comes to rates, hard money loans are generally more expensive than regular options. However, they offer flexible terms as well as fast transactions. It’s also significantly easier to get approved for a hard money loan compared to other types.
Examples of Hard Money Loans
Mortgage refinancing is a common example of a hard money loan. It’s when a refinance is used to pay for a loan secured to a property. Technically, there are ways to do this in a way that the borrower doesn’t receive any money as the funds from this loan will be used to pay for the new loan.
Cash-out refinances are a type of loan wherein a borrower takes out a loan in order to pay for a previous loan. The money that carries over from this is called “cash to the borrower.” While this may seem impractical, there are cases where this can be useful. This type of loan is great for taking on renovation projects or even paying for debts that have unfavorable interest rates.
Bridge loans are hard money loans that borrowers use when purchasing property before selling their current home. An easy way to understand this is to think of it as borrowing money to pay for a new home while you wait for your old home to be sold.
The Advantages and Disadvantages of Hard Money Loans
One major advantage that hard money loans have over other alternatives is convenience. They are usually approved rather quickly, as the property that the borrowers put up for collateral is the only thing that needs to be considered.
These types of loans are also flexible when it comes to how the payments are structured. This is because payment will be evaluated on a case-by-case basis, allowing borrowers room to negotiate for payment schedules that work best for them.
However, the main drawback associated with hard money loans is the cost, as they are typically more expensive than other loans. Just consider high hard money loan rates as the tradeoff for the convenience that comes with this type of loan.
Conclusion
There is a perfect time and situation to make use of hard money loans. Like other options, this can go a long way when it comes to helping you get a good handle on your finances. At the same time, it’s important that you understand the advantages and disadvantages of hard money loans before making any major decisions regarding this type of loan.
If you’re looking to take out hard money loans in Dallas, be sure to go through reputable hard money lenders. DFW Investor Lending’s team of experts can assist you when it comes to this type of lending. If you need more information on this topic, be sure to get in touch with us today to learn more about our services!