Hard money loans are an excellent option for those looking to make a sizable investment in real estate. They offer a unique advantage to borrowers and have a much quicker turnaround time as far as the approval process is concerned since they rely on property collateral versus a borrower’s financial status or credit. Hard money lenders and those who are authorized to give Florida commercial loans can give out these loans with shorter repayment terms and a lower loan-to-value ratio.
Most people turning to hard money loans for real estate purposes either want to flip or renovate properties or invest in one. Hard money loans have a quicker timeline and can be of great use for property renovators and those who want to resale property.
Hard money loans differ from mortgages for several reasons:
- Different timelines
- Different interest rates
- Lenders evaluate applications differently
Hard money loans go much faster than traditional mortgages, which can be a week-on-end process. The difference in hard money loans is that closing can come in merely a few days. That is because approval requirements differ between the two and are much easier with hard money loans. While mortgages are based on a borrower’s income, credit, and many other pieces of financial data, hard money loans are based on property value. Those with lower credit scores find it much easier to borrow and make the investments they need.
Hard money loans also require a shorter repayment period. That can often end up being a few years, while traditional mortgages have anywhere from 15 to 30-year terms. They are one of the best ways to secure a real estate investment on a shorter timeline and may help investments flourish in the future.