Residential hard money loans are a great way for borrowers to purchase homes without dealing with the hassle of traditional lenders. Since hard money loans do not utilize traditional forms of credit approval, they are much quicker and easier to use, with qualification relying solely upon collateral.
Hard money loans are not available to borrow from banks or credit unions, but instead through private investors or companies specifically designated for hard money loans, like Monroe Funding Corp, hard money lenders Florida.
Residential hard money loans are a great asset to someone wanting to acquire real estate but may not necessarily qualify for traditional forms of lending (such as low credit scores or a high debt-to-income ratio). Hard money lenders do not depend on traditional forms of qualification. Many use hard money loans to purchase their first home if they would not qualify for a traditional mortgage. You may have to put a larger down payment on a property, but you will get funding fast. Lenders require this to reduce any risk – they may liquidate equity on the home to pay off the loan if you do not make payments.
Residential hard money loans are popular among house flippers since the turnaround time for financing goes extremely quickly. Flipping houses requires a fast flip time to turn the house around, and with a traditional mortgage, a borrower may lose the opportunity to obtain that specific property, or it may drag out the process of flipping.
These types of loans are the best choice for many borrowers. Traditional mortgages will almost always take more time and result in a longer loan term.