Hard Money Loan Basics
Investing in property can be a good move to make for your future. When you find the right piece of real estate, it can yield some impressive benefits. Of course, you need to think about your options in advance. Financing your investment will require a good amount of research on your part. Still, waiting too long can force you to miss an opportunity. There are a number of different financing options available to you, and each one presents a number of advantages. Hard money loans may be a good fit if you’re pressed for time.
What Are Bridge Loans?
Often referred to as bridge loans, this is a type of financing that helps you land the real estate you need when you don’t have a lot of time to wait around for funding from other sources. Traditional options like taking out a bank loan may be able to provide you with financing, but you may not have the time to wait for the approval process. Bridge loans are structured to help property investors find the funding they need to “bridge” the gap until more lasting financing comes along from another source down the line.
The terms offered by hard money loans are a bit different than the ones you might expect from a bank loan. For one, this is a financing option that is meant to cover a short period of time. Typically, the loan will apply to a span of somewhere around 12 months. Though longer terms are possible, it is not likely to find financing that covers more than a five-year period. The idea is that you have another source of funding in the works for down the line, meaning you won’t need the bridge loan for long.
There are a number of benefits to this type of financing. The process of applying for a bank loan can take time and require a lot of paperwork on your end. Bridge loans can be obtained much faster and help you when time is of the essence. You also do not need as impressive of a credit score when you are looking at bridge loan options. This can be appealing if you feel you will be denied a traditional loan at the current time, but feel a bridge loan could hold you over until your score improves and you qualify.
There are a number of reasons to consider hard money loans when you want to invest in real estate. Weigh out the benefits and see if this is the best choice for your future.