Posts tagged hard money loans

Benefits of Hard Money Loans

By on September 7, 2019

What is a Hard Money Loan? –

According to Investopedia, hard money loans are usually a real estate loans that have their terms based almost entirely upon the property’s value as collateral. Hard money loans are not issued on the basis of borrower creditworthiness. Hard money lenders are most always private investors.

Due to the risky nature of these types of loans, the interest rates are high and the repayment periods are short.

These loans have a legitimate spot in real estate because of some of their important benefits.

Faster Access to Capital –

According to Realtor.com, the beauty of a hard money loan for a real estate investor is when they see an opportunity that must be acquired quickly. The hard money loan approval process is quick and easy, so the investor can snap up their acquisition before someone else grabs it. In fact, traditional mortgage loans take around 45 days to fund the loan, but some hard money loans are funded within 24 hours.

Easy Approval –

So long as the borrower has the requisite down payment and is trying to purchase a desirable property that has equity and investment potential, the lender does not look into their credit history.

Flexibility in Repayment Options –

Investopedia reported that, since hard money lenders aren’t straight-jacketed in a traditional underwriting procedure, the borrowers have the capability of negotiating the repayment schedule more for their benefit.

Short Term –

According to Investopedia, even though the interest rates are high, the terms of these loans are usually short, often only one to three years. This helps home flippers to buy, rehab and sell homes quickly. They don’t want to be bothered with a 15- to 30-year loan for a home that they will only own for a year or less.

The same is true of builders who might acquire a residential lot, build on it and sell the home and property. They don’t need to go through the hassle and red tape of a mortgage loan.

In the case of both the builder and the flipper, if they have played their cards right, the higher costs of the loan will be offset by the high profit potential of their investment.

Under-Served Borrowers Can Obtain These Loans –

The San Francisco Chronicle reports that hard money loans often go to higher-risk situations, such as borrowers who cannot verify their income and financial information or who do not have good credit.

Hard Money Loans Help in Negotiations –

Those with hard money loans can close escrow so quickly that the investors may be able to negotiate lower prices from sellers.

Hard Money Lenders Can Be a Second Set of Eyeballs –

Hard money lenders are real estate experts and will only purchase property that they feel will easily sell and recover their losses in the event of your default. If they are declining your loan application, it is important to find out their rationale. Their advice may save you from a bad investment.

At first, with their high-interest rates, hard money loans may not seem useful. Actually, they are an important source of funding for anyone who does not intend upon holding the loan and the home for long, like flippers and builders, and for those who may not have the metrics that qualify them for traditional mortgage loans

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Apply These 4 Secret Techniques To Improve Your Credit

By on August 23, 2018

Associates Home Loan

Your credit card can be severely affected when you have severe financial distress. Bankruptcy penalties in Chapter 7 on your credit report stay present for ten years. Collection accounts and Chapter 13 stick around for seven years. In case you attracted a tax debt due to financial distress, you will be haunted by unpaid tax liens for approximately 15 years. Who wants to wait for that long to rebuild credit? Absolutely no one!

There is a better way; you need to take measures that will help you to fix your credit for you to become financially stable again. Once the debt is behind you, you need to take the necessary steps to rise above debt and four credit so that you can get new financing and advance your life.

We are going to look at five steps that can assist you to improve your credit.

Go for re-aging

When you have an account that turns out to be delinquent, the lender or creditor often reports the status of the account to the credit bureau. Once this record is in place, you get a negative credit report that stays open for seven years.

If you have an account that is delinquent, inform your creditor and arrange for a repayment schedule to cover up the payments. For you to be able to stick to the repayment schedule, ask for re-aging of the account for the late payments and negative status to be removed. Once that is done, you will have to make your payments to boost your score.

Repair your credit

Having several negative items on your credit report is possible. Most of the penalties can be legitimate, and the only way is to re-age if you want to remove them. But on the flip side, not all items that are negative in your report are right. There have been errors made in credit reports that can drag your score.

You can dispute these errors through a credit repair in different ways:

  • Hire a company to look at your credit report and make any disputes in your case.
  • Purchase a credit repair software to help you recover from your credit.
  • Get an online credit free guide to fix your credit.

If you make a successful dispute, any negative item will be removed, if it is hurting your credit score. This will help you to improve your score within a month which is the time the credit bureau will verify information or remove the negative item.

Pay on time

Your payment history is a primary consideration of your credit score since it accounts for more than on-thirds of the score. Although it seems simple, payments have to be made in time to improve your credit ratings. Each payment made on hard money loans creates a positive record in your payment history. So, if you missed payments tainted your record, the payments will offset this record.

It is important to know that the impact of the bad record decreases over time. Although the items stay on your record for some time, it becomes less impactful. Essentially, a recent missed payment can affect your credit score than a missed payment five years ago.

So, if you make on-time payments as frequently, you will fix your credit faster. The same is true even if you have hard money loans.

Don’t close old accounts

Keep accounts that have always been active available. ‘Credit age’ is how long your credit has existed over the years. It is considered a key third parameter in calculating 15% of your credit score. If you close your oldest accounts, your credit age will be decreased which is bad for your rating.

If it is possible, use your creditors to keep your old accounts in good ratings to minimize your credit age and prevent abrupt decreases in your score.

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