Hard Money Lending For Bad Credit
Flipping houses can be a very lucrative endeavor. However, what can you do when you can’t afford to buy and renovate a home to put it up for sale for a profit? If your credit score is less than stellar, you won’t be able to get a loan from any bank. The solution is to seek lenders willing to offer hard money loans for bad credit borrowers. Let’s see what to expect when searching for such loans and where to look for this kind of lenders.
A hard money loan can offer you several good advantages. First of all, you’ll be able to get it very fast, as the approval process is straightforward. This means that you’ll be able to grab a great opportunity as soon as you spot it. Other types of loans have a much longer approval process and that could prevent you from taking advantage of the best opportunities. Most sellers would rather close a deal faster, than wait for you to get your loan application approved. Finding money right when you need it is one of the key elements of success.
The other great thing about getting hard money for bad credit is that you’ll have an easier time at qualifying for the loan you need. The conditions are much more permissive than the ones of other types of loans and mortgages. You won’t have to strive for years to build your credit score to get approved. This can be your best chance to set up a successful house flipping business sooner rather than later and start making profits right away. Besides, hard money lenders may not even perform a credit check on you. They aren’t interested in validating your income and in evaluating your assets in order to determine their risk of lending you money. Since you’ll use the acquired property as collateral, lenders have the peace of mind that they are going to see their money back.
Hard money loans allow you to pay only the interest rates for the entire duration of the renovation work. This should allow you to invest everything into buying and renovating the property, in order to sell it for a profit as soon as possible. Your monthly payments will consist solely from interest until you manage to sell the house. By the time you close the deal and you get the money, you’ll be able to repay your loan without problems. Nonetheless, you need to keep in mind that such loans have rather short terms, higher interest rates, and high origination and closing fees. These being said, you need to come up with an accurate estimate of the time you’ll need to renovate a property and put it up on the market for sale.
When you get hard money for bad credit, you enjoy all these advantages that can help you make the most out of your efforts of finding great deals on properties in dire need for renovation works. You’ll have the funding needed to acquire the property and to renovate it, as the value of the loan is usually higher than the amount you’d need to pay to buy the house. What matters most is the estimated market value of the house after you renovate it. This is what hard money lenders take into account when they decide upon the amount of money you can obtain.
At the same time, you need to pay close attention to the drawbacks of hard money loans. By carefully evaluating all pros and cons, you’ll be able to make the best decision for your specific situation and real estate market characteristics.