If you’re thinking of getting into the commercial real estate market in Houston, you may be wondering if it’s difficult to qualify for hard money lending. While each lender has their own requirements, the good news is that there are plenty of options available for those who are willing to do their research. In this post, we’ll take a look at some of the factors that lenders will consider when determining whether or not to approve your loan.
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What is Hard Money Lending?
Hard money lending is a type of loan that is made using real estate for collateral. These loans are backed by the value of the property and not the borrower’s credit history. Generally, these loans have higher interest rates than normal real estate loans and a shorter repayment period. They are often used in situations that require expedited financing, such as rehabbing distressed commercial properties. The approval process for hard money loans is typically much quicker and less complex compared to traditional financing options. However, borrowers should keep in mind that there may be additional costs associated with taking out a hard money loan. This is due to the shorter repayment period and greater risk to the lender.
How to Qualify for a Hard Money Loan
Qualifying for hard money loans is generally easier than qualifying for traditional bank loans, but there are a few requirements you must meet. Generally, hard money lenders focus on the value of your property and the expected return on their investment. You must have sufficient equity in your property. If you can prove that the loan will lead to an anticipated return equal to or higher than the interest rate, you should qualify for hard money lending easily. However, if there is uncertainty surrounding the return on your hard money loan, you may be asked to provide additional information.
Hard Money vs. Traditional Loans
Hard money lending is the process of securing a loan with hard assets as collateral. These collateral loans generally use the property the funding is being used for as collateral. Because hard money loans are secured against hard assets, lenders don’t consider credit ratings or many other traditional loan qualifications. This means that hard money loans are often easier to qualify for than traditional bank loans. Hard money lenders also typically approve loans within days, compared to the weeks or months it can take for a traditional loan. When borrowers need cash quickly and rely on hard money lending, they don’t have to worry about stringent criteria being met in order to secure a loan.
Benefits of Hard Money Loans
Hard money loans offer a variety of advantages for borrowers in certain situations. By their very nature, hard money loans are very easy to secure and typically take only a few days to process. This makes them the ideal option if you are under pressure to obtain financing quickly. Furthermore, hard money loans can be approved despite problem credit, allowing many people to access capital who may have been denied traditional bank financing. Finally, hard money lenders often have more flexible terms than banks and typically achieve an agreeable outcome with the borrower. As such, it is plain to see why hard money loans can prove incredibly beneficial in certain circumstances.
Hard Money Lending Solutions from Texas Funding
Hard money loans are a great option for those who are looking to finance a property quickly. The process is easier and quicker than traditional lending, and it can be a great way to get the funding you need. Contact us now to see if you qualify for hard money lending in Houston.
Our team at Texas Funding Corporation offers over 40 years of experience providing hard money loans to investors and businesses throughout Texas. We are proud to be a top private money lender in the Houston area and provide quick solutions for your financing needs.