If you are planning to build a new home but not sure how to finance it, hard money loans would be the perfect choice for you. It’s the best suited for availing finance in order to construction home or for remodeling an existing home. A hard money loan is typically a short-term loan secured by real estate. It comes with certain features that are distinct from the other regular loans. Here are top three significant advantages of obtaining a hard money loan:
1.Fast Approvals and Funding: The speed of the approval process and funding of the loan is often seen as one of the biggest advantages of hard money loans. In many cases, a loan can be approved on the same day as the initial request. A hard money lender can get your project funded in 10 days or less.
2.Easy To Qualify: A hard money loan is much easier to qualify rather than a tradition loan. It’s the best choice for those who can’t receive traditional loans. If you have been rejected by the banks for a conventional loan based on your credit score or other issues, you are still able to work with a hard money lender to get the money you need.
3.No Prepayment Penalties: It’s one more advantage of getting hard money loans that contribute to your success. Traditional banks often charge hefty prepayment penalties if circumstances change and a loan is fully or partially repaid before the due date, but there are no prepayment penalties with hard money loans.
What Is Hard Money Construction Loans?
Hard money construction loans are collateral-based loans and also its the best alternative to a bank loan or traditional mortgage when financing the construction of a building, or making improvements to an existing building. The collateral for a hard money construction loan is the value of the project after completion. Most of the real estate investors or borrowers find hard money construction loans more convenient because the restrictions are much easier in comparison to traditional loans.
Qualifying For A Hard Money Construction Loan
To qualify for a hard money construction loan, a qualified builder must be involved in your construction project. The private money lenders require detailed specifications of your construction plan. This includes all the details including floor plans and the materials that are going to be used in the home. Your home value must be estimated by an Appraiser in order to get a hard money construction loan. Typically, you need to put down 20-25% minimum for a hard money construction loan. This ensures that you are invested in the project and would not just walk away if things go wrong. This also protects the lender in case the house does not turn out to be worth as much as they expected.
Once you have qualified for and been approved for a hard money construction loan, the lender begins paying out the money they agreed to loan to you. However, they are not just going to give the builder the cash all at once. Instead, a schedule of draws is set up.
The Bottom Line:
A hard money loan is the best source of financing when banks are not an option or the loan is needed in a short period of time. If you’re having a tough time securing the traditional loan, you can go for a hard money loan to finance your home construction project quickly.
To find out whether you qualify for this type of funding or not, Contact Magna Capital Group, Inc. Today! We specialize in innovative real estate financing for borrowers who fall outside the box of traditional lending guidelines. Magna Capital Group offers private hard money loans for any type of residential and commercial project. We understand the complexity and details of construction projects and find proper financing to make your project successful. We are fast, creative and reliable consultants with the experience and lending sources to keep your project momentum moving forward.
For more details about our hard money construction loans program, Call Us at (310) 734 4044 or Email at email@example.com.