Posted on: 8 April 2018
Are you looking to purchase a home with the intention of flipping it? If so, you'll need to secure the financing for the purchase. Instead of getting a traditional mortgage for this type of purchase, you can get a hard money loan as a much better alternative. This is what you need to know about hard money loans.
What Is A Hard Money Loan?
If you have experience in flipping homes, it's possible to qualify for a hard money loan from your lender. This loan is quite different from a traditional loan since the lender will not base the approval off your personal credit history. Instead, they look at the property you are trying to approve for the hard money loan and if it will be property worthy of using for collateral. Lenders may also make a decision based on how much of your own money you are putting into the home, which means that you have a bigger investment in selling the home and making a profit.
Will A Hard Money Loan Cover Repair Costs?
When applying for a typical mortgage, you will only be approved for the money that you need to purchase the home after the down payment is made. However, there are additional costs involved with flipping a home that you'll need cash for.
One benefit of using a hard money loan is that you can include the money needed for renovations with the same loan. If you do not have the cash on hand and know that you need to borrow, this can simplify the lending process since everything will be included in a single loan?
Will A Hard Money Loan Take Long To Approve?
Another factor to consider is how long it takes for a traditional loan to approve. When buying a home with a long-term mortgage, you can expect it to take at least a month for everything to be approved. Unfortunately, this can be too long if you are looking to flip a hope to make a profit.
Expect a hard money long to have a much shorter approval process. While it is hard to say exactly how long it will take to be approved, know that lenders are aware that you are purchasing the home with the intention of making a profit. Losing out on a home because an approval takes too long will waste everyone's time in the end.
For more info about home loans, speak to a local lender.Share