After 10 years of marriage, I’m still enjoying living in the first home I moved into with my husband. Buying a first home can be one of the most exciting events in a person’s life. Before making this important expenditure, people need to first sit down and determine how they will successfully finance it. After all, a home will likely be the most expensive purchase you make in your life. Talk to a loan officer and determine how much money you can reasonably borrow. Then, decide how much money you want to use as a down payment. You also must decide how many years you will finance your home for. On this blog, you will learn about the process of buying a first home with a loan.
If you're trying to buy a home, you have multiple options. You don't just have to go with a conventional loan: you can also go through a hard money lender. Hard money lenders loan their money based on factors other than finances and credit scores, so they can be an excellent alternative. Read on to learn more about hard money loans.
1. You usually don't have any credit requirements to meet.
A hard money loan is a loan that is based entirely on equity. It does not require a high credit score or a good financial situation. Of course, you should still be in a good financial situation if you want to pay back the loan—but because the loan is secured on the equity of the property you're buying, the lender is going to be far more lenient.
2. You are often working with individual investors or partnerships.
Rather than going through a bank, working with a hard money loan means you're dealing directly with individuals who are willing to finance you. This gives you a lot more leeway in negotiations; in some situations, you can essentially gain the benefits of a financial investor or partner—and you are more likely to be able to negotiate if issues arise.
3. You can close the loan quickly.
Financial programs that are designed for the purposes of down payment assistance or low mortgage payments can sometimes take months to close. Because a hard money loan is dealing with an individual investor, you may be able to get cash in hand very quickly. Sometimes it's necessary to close a loan quickly -- such as buying a property at an auction or purchasing a property under its value that is going to have to sell fast.
4. You can use a hard money loan for a commercial property.
Hard money lenders are often taking gambles. If you are looking to buy an investment property, a hard money loan may give you the leverage that you need. Most mortgage loan programs for sub-prime lenders are only open for first-time home buyers and residential owners—they aren't open for things like commercial property or rental properties.
A hard money loan is going to have a higher interest rate than a conventional loan, but if you need the money now it can be advantageous to get the loan rather than wait. This is especially true if you believe that you can begin making money now on the property that you're going to purchase.