Residential properties are more than just homes for people – they’re also a solid investment opportunity and one that can help you transform your financial portfolio in a big way. But it’s not always that simple to get the funding needed, and for commercial endeavors sometimes looking at a hard money lender Houston is a good idea.
Hard money loans are designed to fit into the needs of those who don’t currently qualify for a traditional loan. These could include those with bad credit, but are often more aligned with those looking to make a quick real estate move that don’t currently qualify for a traditional loan or who need additional funds in order to take steps to meet the requirements of a different type of loan.
Here are some key points to understand about a hard money lender Houston, including what they can do for you and how the loan works in basic terms.
• These loans aren’t as dependent on income, debt to income ratio, or credit scores. Instead, they’re secured by real estate assets. In this way, a lender is able to extend a loan to a borrower without worry since they will take over the asset in the event of a default.
• Loans of this nature can have higher interest rates and other similar structures that help offset the additional risk to the lender.
• The loan to value ratio is normally around 60 to 65 percent. This helps keep risks lower for lenders while still giving a borrower the kind of funding they need to move a project forwards.
• Commercial loans of this nature are usually very short term and are used to move a project forwards quickly so that it can qualify for a loan down the road. They’re very similar to bridge loans, and in some cases are used almost interchangeably.
For example, if a residential development requires a road system before a traditional loan will be extended, a hard money loan can be used to install the road system. This is just one small example of the common things these loans are used for in the world of residential investment. No matter your specific need, the key thing to understand is that if you can’t secure a traditional loan, there is still a very good chance that you might be able to get a hard money loan and continue to move your plans forwards.
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