Tips For Using Hard Money Loans Effectively

Hard money loans aren’t as expensive as they may seem. In today’s lucrative real estate market good homes can be purchased for pennies on the dollar for those that have quick access to cash. The ability to find a property and close in two weeks or less will give you a clear buying advantage over home buyers attempting to use conventional financing which can take up to 45 days to close.

Since Hard money loans are funded with private investors’ cash and retirement accounts they have very little paperwork or qualifications. Your down payment is essentially the main qualifying factor. Hard money loans are home loans for people with bad credit. The private money investor only requires equity to consider funding a purchase or free and clear property cash out equity loan.

How To Save Money Using Hard Money For Your Transaction

Use your pre-approval and ability to close in two weeks or less to negotiate a larger discount on the home’s purchase price

Make sure you are getting a longer term hard money loan. Most hard money loans have one or two-year balloons. Even if the closing costs are lower having to payoff or get a new loan in this time frame makes your cost of money a lot higher as compared to 5 year balloon or full term loan.

Try to hold the property for at least a year as a rental and sell to the tenant. You’ll save money on closing costs and be able to offer tenants the option to get financed at a much higher price if you can offer the home with financing in place.

You’ll be able to buy more real estate with a loan than you can with cash or short-term financing.

You can borrow as little a $20,000 even at 12% interest the interest payments are low.

If you have other free and clear real estate you can buy with no cash out-of-pocket or borrow to purchase with all cash.