Did you just see a real estate opportunity that you don’t want to pass? Hard money loans are excellent for such situations when you want to get your hands on some cash. By borrowing from a hard-money lender, you have excellent opportunities like investing in fixing and flipping properties. Moreover, your hard-money lender is less likely to care about your credit score, given that you improve your situation financially. You can consult a professional to understand the hard money lender process.
Do you know there are different types of hard money loans? We’ll mention the types to help you comprehend what they offer. Keep reading to get familiar with the hard money loan types.
What are the Types of Hard Money Loans?
You can get a better understanding of hard money loans by learning the types it is available. These types include the following:
1. Transactional Hard Money Loans
You can get transactional hard money loans if you’re looking to finance the purchase of a property. These are typically short-term loans that are excellent for buying, fixing, and selling a property. Furthermore, it depends on the after-repair value of the property. The best part? They’re the easiest to acquire since the borrower won’t need to have a high credit score or a lot of equity in the property.
The benefits of transactional money loans include these:
- You can get fast approvals, as little as 24 hours
- It’s easy to qualify for
- Lower interest rates compared to other types of loans
2. Bridge Hard Money Loans
Another alternative for fast access to cash is bridge hard money loans. This loan is pretty popular since it allows the borrower to go through with the sale and purchase process. Thus, the lender might not wait for your existing home to sell. Bridge hard money loans rely on the property’s value, which means there’s a lower risk than a transactional loan.
Here are some benefits of bridge hard money loans:
- It allows more flexibility
- You can get fast approval
- The loan might close in a short amount of time, as little as two weeks
3. Rental Hard Money Loan
For people who have recently ventured as a developer, it can be challenging to estimate the cost of renovating a building. Therefore, rental hard money loans save the day when you want quick access and flexibility. This can be especially helpful if you require emergency funds or another resource when investing in a project. Renovating an old building can be more costly than you would expect. However, you can get a rental hard money loan to spend wisely.
The advantages of rental hard money loan include the following:
- There’s an interest-only option, meaning you’ll only have a set period to pay off the interest
- You can get a rental loan as quickly as five days
- You’re less likely to have a payment penalty
4. Commercial Hard Money Loans
You can take a commercial hard money loan if you require finances for purchasing or renovating a commercial property. The benefits of a commercial hard money loan include the following:
High loan amounts, give you the opportunity to finance a larger project
It is versatile; you can use the loan for renovating different properties
There’s a better Loan to Value or LTV
What Should I Do?
You can choose which hard money loan to opt for after getting familiar with the types: transactional, bridge, rental, and commercial. Red Door Funding can help finance your fix and flip projects and more. Talk to us at (832) 539-1099. Or, better yet, visit our office at 110 Avenue B #100, Stafford, TX 77477, United States.