Thinking about buying real estate in Tarzana, California? Need a loan but afraid your credit will prevent you from qualifying? Whether it’s a residential property that you intend on using as your private residence or a commercial property that you plan on fixing up and leasing, We can help you get the cash you need – regardless of your credit. How? – With a real estate hard money loan.
What is a Hard Money Loan?
A hard money loan similar to a standard real estate loans in that it involves borrowing money from a lender; however, that’s the only similarity these two types of loans share.
Traditional real estate loans are lent by banks and credit unions. These financial institutions are granted based on the creditworthiness of a borrower and they’re paid back over a prolonged period of time; usually 20 years. With hard money loans, real estate is used as collateral for the loan rather than the borrower’s creditworthiness.
Lenders (which are private entities or individuals, as standard financial institutions don’t grant hard money loans) consider the loan-to-value ratio; the amount of money the borrower wants to borrow to purchase the property. The lower the loan-to-value ratio, the more likely the loan will be granted.
Hard money loans are considered a form of short-term lending, as the terms are much shorter than standard loans. Typically, the terms are 12 months; however, the terms can be extended for up to five years. Monthly payments consist of just interest or interest and a portion of the principal balance and a larger balloon payment is made to cover all or most of the principal balance at the end of the loan’s term.
Why Consider a Hard Money Loan?
Hard money loans are an excellent option for anyone who is interested in purchasing residential or commercial real estate in Los Angeles. Why? Because they offer numerous benefits over a traditional loan.
- Credit history isn’t a factor. Because the property is used as collateral and the loan is based on the value of that property, your credit history doesn’t matter. Therefore, if you have bad credit or no credit, you can get approved for a loan.
- Faster approval. The approval process for a standard loan can take 45 days or longer, whereas hard money loans can be approved in two weeks or less. Faster approval means you can get into your property faster.
- More flexibility. These short-term loans are a lot more flexible than standard loans. Usually, the repayment schedule can be adjusted to accommodate your needs.
Think a hard money loan is the right choice for you? Contact The Brookline Group today to learn more about your options.