Why A Hard Money Loan?
While most people who have anything to do with real estate have heard of hard money, otherwise known as a private money loan, there are still many who can’t imagine a use for it.
Who can blame them? The rates and fees are higher than banks charge. For someone needing a loan it can look and feel discouraging. So, why would anyone use it?
Actually, there are many reasons.
The Many Reasons To Use A Hard Money Loan
Maybe the property is in poor condition or has problems with permits. It could be that the borrower has bad credit or can’t prove income to the satisfaction of the bank.
You have to keep in mind that most hard money loans are for a short loan term. Unlike traditional 30 year mortgages, a hard money loan could be anywhere from 3 years to 7 years or somewhere in between. Also your payments are not going to be astronomical because you will be paying interest only payments with a balloon payment at the end of the loan term. By the time your loan is getting ready to balloon hopefully whatever brought you to us in the first place will be remedied. If it has then you can go and get a loan at a traditional bank or if you like you can refinance with us.
Hard money can also be a good option for real estate investors who are in the business of fixing and flipping a property for a profit. Real estate investors need cash quick and for a short period of time. Many banks are not in the business of giving loans for a 6 to 12 month loan term. That is where hard money comes in.
Hard Money Loans Make Sense
So you see, there are many reasons that a hard money loan makes sense. ARC Capital works with over 400 investors, we have helped thousands of people in unique situations that have been turned down by the bank. If you’re not sure that a hard money loan will work for you just give us a call and talk to us about your situation and we will let you know!