If you’re considering taking out a hard money loan, you might be wondering how hard money lending in Houston works. Because hard money loans are based on the collateral of the real estate you intend to use the loan for, lenders base their loans on the strength of the deal, rather than your personal background. If you have bad credit or don’t qualify for a traditional mortgage, hard money lending in Houston can help you invest in the property without a traditional loan. Your private money lender in Houston focuses on the loan-to-value ratio (LTV) to determine loan amounts, rates, and other information. So, learn more about LTV and hard money loans.
What is LTV?
Both traditional loans and hard money loans take LTV into account. To calculate the LTV of your deal, take the total loan amount and divide it by the appraised property value. This gives you an idea of what your LTV is. For example, if you need a loan for $90,000 and the property value is $100,000, the LTV ratio for the deal is 90%. When it comes to hard money lending in Houston, this helps your lender evaluate the strength of the deal they’re lending for.
The two main factors that influence your LTV is the sales price and the value of your property. Therefore, to improve your LTV, you can try to negotiate to a lower sales price. Or, later, you can reappraise after you’ve made improvements to the property if your property value increases. This, too, can improve your LTV rate.
What Does LTV Have to Do with Hard Money Lending in Houston?
So, what does this all have to do with collateral loans in Houston? Basically, lenders will make you an offer based on the LTV of your deal. Some lenders put caps on the LTV rates they will lend to. However, your private money lender in Houston offers loans for high LTV ratios to help you take advantage of opportunities before they slip through your fingers.
Before you take out any loan, you should have an exit strategy in mind. So, when you’re considering hard money lending in Houston, decide on a plan to help you pay it off. There are many ways you can do this. One strategy you might employ is to take out a hard money loan for your property, make improvements to raise your property value, improve your credit if need be, and then refinance your loan to a traditional mortgage. Also, work with a reputable hard money lender to ensure the best outcomes for your real estate investment.
At Texas Funding, we have been providing innovative loan solutions for individuals and companies small and large since 1982. Our experienced staff and financial strength allow us to offer you the best loan options for your individual circumstances. Call us today at 1-800-833-0138 to learn how we can help you and discuss your borrowing needs with our professionals. We are here to serve you.