A hard money loan is a convenient tool that can help you purchase real estate while you’re waiting for funds from the sale of another property. It’s only meant to be a short-term loan and is not appropriate for any long-term financing needs. When you get a hard money loan, it’s secured by real estate and is funded by a private investor. This is different from traditional loans, which are funded by conventional lenders (such as credit unions and/or banks). But before you talk to hard money lenders in California about getting a hard money loan, here are some very important questions you should ask yourself.
Do I Need the Money Right Away?
The main reason people get hard money loans (also known as bridge loans) is because they need the money right away. This is usually because they want to buy a property that is certain to have many competing bids. When time is of the essence and you don’t want to miss out on a great real estate opportunity, a hard money loan may be a good solution for you.
Am I Certain My Property Will Sell Quickly?
Remember, anytime you get a loan from hard money lenders Los Angeles, you’ll need to pay the money back quickly (usually within 12 months). So if you’re planning to pay the loan off with the funds you receive from another property you’re selling, you need to be pretty certain that your property is priced to sell quickly, and that the amount you receive from the sale will cover the amount of your hard money loan. If you have any doubts about your ability to pay off your loan quickly, you may want to reconsider. You don’t want to put yourself in a bad financial situation.
If you do take out a hard money loan and have trouble getting the money necessary to pay it off, you may be able to file for an extension of 2-5 years, depending on your lender and your individual situation. Your loan extension may be structured in such a way that there’s a balloon payment due at the end, so keep that in mind when playing your payoff strategy.
Is the Deal in Question AppResidential Bridge Loan Lenders for California Real Estate | Bridge Loan Financing & Mortgagesropriate for a Hard Money Loan?
Bridge loans for real estate aren’t appropriate for all types of real estate deals. So before you apply for such a loan, you should ask yourself if the deal you’re interested in fits the bill for a hard money loan. Here are the most common types of real estate deals for which bridge loans are used:
- Construction loans
- Fix and flips
- Land loans
- When a real estate investor needs to make a quick purchase
- When the buyer doesn’t have the best credit
Hard money loans are great for situations when funding is needed quickly. Usually, hard money loans can be funded in a week or less. Other types of loans can take weeks or even months to receive funding. If you’ve asked yourself the above questions and you’re certain a hard money loan is the right choice for your needs, contact reputable hard money lenders California to apply.