Many people mistake hard money loans in Houston for bridge loans. While they are often very similar, there are some key differences between these two financing options. Both can help provide money for your projects quickly and for less time than a conventional loan. However, hard money financing can offer some other benefits for your situation.
Similarities Between Hard Money Loans in Houston and Bridge Loans
Both bridge loans and hard money loans in Houston are short-term financing options. Bridge loans and hard money loans have shorter terms and higher interest rates than conventional loans. For example, most bridge loans have a term of one to two years, while hard money loan terms are generally one to three years. However, hard money loans in Houston can be for a term of anywhere from a few months to five years, depending on your needs. Also, both are options for when conventional loans aren’t an option for your project.
Differences Between Hard Money and Bridge Financing
However, there are some important differences between bridge and hard money loans. For example, hard money loans must use assets as collateral. While bridge loans often utilize collateral, this isn’t always a requirement.
Also, funds for hard money financing come from a private money lender in Houston. Bridge loans, on the other hand, can be privately funded or funded by financial institutions. Because hard money loans in Houston come from private lenders, this means there are often fewer hoops to jump through compared to bridge loans.
Most bridge loans will be based on your FICO score. In most cases for a bridge loan, you must have a minimum of a 625 score, and lower scores can break the deal. By contrast, a hard money lender doesn’t base the loan on your credit score, but on the strength of the deal. Therefore, hard money loans in Houston are great for individuals that have lower FICO scores. In addition, hard money closing times are often faster. While bridge loans generally take between two and four weeks to close, hard money loans usually close within five to ten days.
Finally, bridge loans are almost always used for purchasing a property. While hard money loans are also often used for purchasing commercial land or property, you can use the funds for a wide range of things. For example, some things you can use hard money for include:
- Rehabilitating commercial properties
- Completing tenant improvements
- Paying off debt to improve debt to income ratio
Therefore, hard money is a great option for a variety of projects when you need fast approval. They can be more versatile than bridge loans, which is why many choose to use hard money for their needs.
Experienced Private Money Lender in Houston
At Texas Funding, we specialize in hard money lending in Houston for commercial properties. We can make loan deals that traditional financial institutions will not. Our team is here to help you take advantage of opportunities as quickly as possible. We offer high loan to value arrangements and a streamlined approval process. Call us today at 1-800-833-0138 to learn more and get funding. We are here for you!