With a wide variety of loan types and other financial services available, it can be difficult for homeowners and business owners alike to determine the best course of action. If you’re looking for a way to improve your financial situation, learn more about hard money loans. These loans come in a variety of types, and each type has its own down payment terms and other conditions. Find out how you can make payments, purchase property and improve your finances, starting today.
What Are Hard Money Loans?
A hard money loan offers you the ability to receive financing for a variety of real estate transactions. Hard money loans are offered by private lenders who help you purchase the property you need. Whether you’re looking to fix and flip a property, purchase commercial real estate or buying a second home, there are some competitive hard money loan options available to you.
Typically, a hard money loan is backed by property. Whether you’re using your new property as collateral or borrowing against your current residence, a hard money loan requires a backing that helps ensure your lender will receive payment.
There are many benefits to choosing a hard money loan for your real estate transaction. If you have a low credit score, recently faced a foreclosure or bankruptcy or have less than two years of current employment history, it may be difficult for you to receive a traditional mortgage or business loan.
Thanks to hard money loans, you can receive the financing you need without worrying about a credit check or extensive financial history. Learn more about the different types of hard money loans available to you to determine whether you need to put money down to receive your loan.
Types of Hard Money Loans
While all hard money loans basically work the same, there are some distinct differences between each type. For example, some hard money loans require no money down, while others require a percentage of the loan amount. Here are some of the most common types of hard money loans available to you:
- Multifamily hard money loans
- Accessory dwelling unit loans
- Construction and land loans
- Refinance reverse mortgage loans
- Real estate bridge loans
- Commercial hard money loans
- Fix and flip loans
- Cash out and refinance loans
Each of these are loans come with their own terms and conditions. Depending on the type of transaction you’re looking at, some still require a credit check.
Down Payment Options
Talk to a loan provider to determine the down payment necessary for your hard money loan. A hard money loan for a residential owner-occupied property requires a down payment of 25 to 30%. You’ll also need to have a credit score that is capable of being increased within three years to receive a long-term loan. Bridge loans, on the other hand, are hard money loans that require no down payment at all. This loan type can actually be used to secure the funds you need for a down payment.
If you’re ready to improve your financial situation and learn about all the private money loan options available to you, check out the best private money lenders for residential real estate in your area.