Speed is an essential factor when it comes to booking profits in the real-estate industry. Financing options like hard money loans aid investors in closing important deals. In fact, real estate investors mostly opt for a hard money loan over a conventional mortgage. While older players in the industry know where to get hard money loans from, new players don’t. If you’re a new investor looking for a quicker financing option, we can help you.
The more you know about alternative financing options, the better. Hard money loans are undeniably easier to qualify for than a conventional mortgage. While it may be easy to find yourself a hard money lender, being vigilant is essential. Some hard money lenders are loan sharks that do not respect usury laws and threaten borrowers to extract repayments.
The real estate industry may significantly change in the coming years. Therefore, being mindful of your risk appetite and actions is necessary. To survive in the industry, real estate investors need to make wise decisions. Before getting a hard money loan, it is best to understand what the loan entails.
What is a hard money loan?
A hard money loan is a short-term loan secured by collateral. These loans usually have a term of one year or less. The asset that is being used as collateral must have a sound value for it to be acceptable to the private lenders. Real estate investors who take hard money loans use the property as a security. Extraneous factors like the credit history are not that important when it comes to getting a hard money loan. The processing time of these sort of loans is very short making it a fast financing option.While financial institutions like banks, finance conventional mortgages, a pool of private investors fund hard money loans. These private investors earn from the interest they charge for providing the funds. They check if borrowers qualify for the loan by assessing the collateral’s value. A hard money loan is typically processed within a week. This processing time is appealing to real-estate investors who need funds quickly.
One significant difference between conventional lenders and hard money lenders is the interest rate they charge. While the typical lenders charge less, they are slower in processing loans. On the other hand, hard money lenders charge more because they bear more risk, but their process is quicker. In monetary terms, the total costs of a hard money loan are higher than the ones of a conventional mortgage. Once an individual knows what a hard money loan is, he can proceed to get it quickly.
Research your options online
The internet is a powerful tool that you can use to your benefit. A simple Google search of ‘Hard Money Lenders Houston’ will help in erasing your miseries. Since you will find a lot of material online, it is essential to filter out the information you need wisely.
There are many hard money lenders present in Houston. You need to read reviews about the hard money lenders you are considering before you take a loan from them.
Meet up with real-estate investors
One of the most significant risks of a hard money loan is that some lenders are unreliable and may use threats. After all, some hard money lenders are loan sharks. To eliminate such risks, you can ask real estate investors in your circle for recommendations. If you don’t know anyone in this field, you can expand your network by attending local real estate investors’ meetups and events.
Currently, there are 1.3 million real estate agents operating in the US out of which 114,060 are concentrated in Texas. Experienced property investors can provide valuable information regarding hard money lenders. Do consult them before taking a loan to avoid hitches in the future.
Ask a real estate agent
Since real estate agents have a lot of know-how, they are bound to know one or two hard money lenders. If you have a real estate agent, you should ask him for details of reliable lenders. While this option may not work for everyone, it is a solid one. These agents want to maintain a long-term relationship with you and so do not want you to make a mistake.
There is no denying the fact that real estate agents have an extensive network in the industry. They know hard money lenders who are reliable. Regardless of wherever you get your options from, never compromise on the lender’s reputation.
Real-estate investors often need to rely on hard money loans. Looking for a reliable hard money lender in Houston is not a problem. Before getting a hard money loan from a pool of private investors, a thorough research is essential. Regardless of whether you ask your agent to help you or research online, finding a hard money lender isn’t too difficult. Thus, the most important factor to take into account while dealing with hard money lenders is their reputation in the market and the way they follow and respect the usury laws.