Hard money loans refer to funds advanced by private or non-traditional lenders. Often backed by tangible assets such as real estate. These loans are the go-to when you need quick turnarounds between the purchase and sale of your desired property, making their use prevalent in the real estate sector. They can also be used for fast home financing, allowing borrowers to secure loans with ease. Due to this, they will often involve higher rates and shorter repayment terms, usually lasting one to three years.
How Hard Money Loans Work
Borrowers interested in purchasing commercial, rental, or fixer-up homes use these properties as collateral to get funds from investors. Lenders will require proof that you can pay back the funds without defaulting and will often review your credit scores to verify your ability to pay back the loan. They may also need to assess your income, with other types of collateral or savings helping you secure the funds. Borrowers with a high debt to income ratio may find it challenging to get funds. With lenders opting to finance individuals with low debt to income ratios. If you cannot pay back the loan, your lender will take the collateral and sell it to help them get their money back. Making the value of your collateral an essential part of the lending process.
When Do You Need Hard Money Loans
As previously stated, hard money loans are ideal when you cannot secure traditional loans. This type of financing generally focuses on the value of your real estate project, helping you get access to quick funds. This also opens up room for additional funding for later projects. Helping you take advantage of fast-moving opportunities in the market.
Additionally, if you are looking for flexible sources of capital, hard money capital will be a better alternative. This funding avenue allows you to structure your repayment plans as needed, helping you settle for convenient schedules.
Hard money loans also allow you to partner with lenders who are willing to be active participants in your project, helping you work with experts in your preferred area of real estate.
Whether you need a hands-on partner or a quick source of capital to accelerate your real estate investment, JHF Capital is the solution you need. Call us today for capital geared with your business needs in mind.