Real estate investing is well-known as an excellent way to build wealth. Purchasing properties, however, can be quite expensive. Many people require financing in order to break into this form of investing. This is where hard money loans can be effective.
What Is a Hard Money Loan?
A hard money loan is a particular type of asset-based financing that is often used to finance commercial projects. They are generally short-term loans that are taken against the value of the property being financed instead of the creditworthiness of the borrower. They are offered by a finance agent or private lender rather than by a traditional bank.
The loan-to-value (LTV) of a hard money loan is generally lower than that of a traditional loan because the property is the only protection the lender has if the borrower should default. Because of the higher default risk, the interest rate charged for a hard money loan tends to be higher than other loan types.
How Can You Benefit from a Hard Money Loan?
Taking on a hard money loan comes with several benefits. These include:
- No need for collateral other than the property that you intend to finance
- Quick funding, generally within a matter of weeks or less, and
- More flexible terms than are typically offered on loans from a traditional bank.
As you consider your choices in hard money loans, be sure to pay attention to the details. Make sure that the rate offered and the loan terms are acceptable for your situation.
Connect with Point High Finance
The folks at High Point Finance are experts in hard money loans. They can answer any questions that you have and guide you through the process of obtaining the right loan for your situation. They welcome your call today.