Did you find a house for sale that you want to renovate and make a nice profit on? If you don't have the funds to purchase the house and have not had success with obtaining a bank loan, you might want to consider applying for a hard money loan. Take a look at this article for answers to some of the questions that may come to your mind concerning hard money loans.
What is a Hard Money Loan?
A hard money loan is basically money that a lender provides based on the borrower putting an asset up as collateral. In many cases, a home that is being purchased with the borrowed money is used as collateral. However, other valuable assets can be used as the collateral for a hard money loan as well. You will basically be borrowing money from a private lender, which can make the approval process a lot faster than with banks.
What Are the Qualifications for a Hard Money Loan?
Although it is possible for your credit score to be considered for a hard money loan, it won't be very important. The main thing considered will be what the value of your collateral is estimated at. Your job history and monthly income are also not big factors in the approval process. Hard money loans are also easier to qualify for because documented evidence of various aspects of the application is not typically required for approval. However, keep in mind that each private lender can have specific qualification requirements.
How Much Money Can Be Obtained?
There are not a lot of limitations as to how much money you can obtain from a hard money lender. It will be up to the lender as to what you can receive. The loan amount will likely be based solely on the value of the asset that you are using as collateral. For instance, if the house that you want to purchase is valued at $100,000, you might be able to get a hard money loan in that same amount if it is used as collateral. However, some loan companies will only lend up to a certain percentage of what the collateral is worth.
What is the Hard Money Loan Process Like?
Basically, you will have to go through the closing process on the house that you are purchasing before a hard money loan is given to you. The lender will likely request title and escrow services to make sure you actually become the owner of the property being used as collateral. Apply for a hard money loan to find out how much you can get approved for.
For more information, contact a company like Crossroads Investment Lending.