In real estate, some projects fall outside of fitting the terms necessary for traditional financing options. Not all deals are cookie-cutter. In these cases, since it is seen as a more risky investment, standard lenders are not typically interested in investing. These types of deals may require a more creative form of financing, such as hard money lending in Texas. While hard money loan rates may be higher, they have also been very key in keeping the real estate market flowing, whether the market is up or down. Here are some reasons you may need a hard money loan.
Quicker Closing Time Frame
Traditional lenders usually state that it may take them 45-90 days to close on a loan deal. This timeframe stretches from the time you fill out the loan application, to the loan closing. When it comes to a good real estate deal, this timeframe can be very risky. In many cases, the buyer does not want to risk losing out on the deal and would much rather seek an alternative form of financing. In this case, hard money lending could be a go-to, as they require less paperwork, documents, reviews, and hoops to jump through. In this case, with hard money lending, the funds could be issued rather quickly, if the property meets the numbers and specifications for what the hard money lender is looking for.
A Short-term Financing Option
Hard money loans are often called bridge loans. A hard money loan or bridge loan is designed to be short-term. They usually have a maturity of one to three years. This makes hard money loans a good go-to for fix-and-flip properties and for owners of commercial real estate, who may be embarking on developing a new property. Any of these and more could be a specific hard money loan, short-term lending need.
If the buyer has faced some credit challenges, then they may not have the option of going with conventional financing. In many cases, with hard money lending, a person’s credit is still assessed. However, it is not always the deciding factor. The quality of the deal and the person’s real estate experience in this area, can play a part. If your credit score is below 650, this can rule out the opportunity for many traditional loans, but the door may still be open to you through hard money lending in Texas.