Americans seem to have lost trust in banks and traditional lenders. It could be a millennial thing – the generation doesn’t seem to trust corporations at all. However, it could also be a failure on the lenders’ part.
Anyone who seeks a real estate loan must prove their financial stability. If for any reason, your credit history is less than flawless, the procedure will be lengthier, the policies will be stricter, and the rates will be higher if you manage to get an approval.
It creates a problem for real estate investors who need to act quickly whenever a promising property shows up on the listings. In Texas, Houston hard money lenders are providing Americans with a much faster way to get real estate loan.
Instead of spending time in the laborious process of proving your ability to afford the loan, you can get quick money against a real estate collateral.
Now, it may seem like a feasible option if you are in the flipping business. Hard money lenders will even lend you on a much lower Loan-to-Value (LTV) ratio than traditional lenders and banks. Nevertheless, there are certain factors you should consider before you decide to choose Houston hard money lenders over conventional banks.
Consider the health of the property
Hard money lending is most feasible when you have a property that is sure to return a substantial profit in a short amount of time. Keep in mind that since hard money lenders are taking a more significant risk by not caring about your credit score, they have a slightly higher interest rate than traditional lenders. So, it makes more sense to obtain such loans for property that will prove highly profitable within five years if not less.
Texas real estate industry seems to be doing well, and you will find plenty of Houston hard money lenders willing to lend you the money to invest. However, they will also determine the terms based on the health of the property. They have their evaluation process, and you might get to negotiate lower rates for your asset that appears highly promising.
Determine your best lending options
Not all hard money lenders work the same way. There is a difference in the way they get the money that would be lent to you. What suits you will depend on your lending requirements.
The most common and simplest type of Houston hard money lenders is direct lenders who utilize pooled capital to fund your loan. They can easily cater to your requirements, and they are more flexible with the underwriting guidelines and deal structure. Everything can be tailor-made according to your needs.
You can also choose to work with a hard money broker who works with some lenders. They can get you a quicker approval even for non-traditional properties. However, this can be a slightly expensive option as the broker will also charge an additional fee for their service.
If you are looking for the lowest rate, you might want to work with a syndicator. They will raise capital from individuals after you have presented your deal. It means that they aren’t always able to offer a quick solution. If you can afford the delay, this is a great option. If you are after a hot cake, there is a higher risk of losing that deal.
The credibility of Houston hard money lenders
There is a jungle of Houston hard money lenders out there, but not everyone offers the programs or terms suitable for your needs. It is essential to investigate and seek recommendations and reviews before you choose. You can also consult them to get an understanding of their terms and condition.
Some of the leading money lending firms have set the bar by offering loan programs that cover up to 70% of After-Repair-Value (ARV) and finance the complete cost of the property with any penalties for prepayments. It pays to know what the highest standards are so that you can choose a lender who can offer the best value.
Want to find out about hard money lending and how it can benefit you? Don’t hesitate to give us a call at 1-877-420-7346.