The first thing you should know is that a lot more loans can be made to work than most people would expect. It comes down to figuring out what the options are and if any of them will work for you. In some cases, the best decision is to wait and not do anything yet.
Once you have that idea in mind, it is important to know that there are a lot of different ways of using hard money. The most common one is buying an investment property with the intention of fixing it then either selling or refinancing it.
Another common use is by real estate investors who can’t qualify for a bank loan but want to buy investment property. This one is especially useful in areas where the properties have lower prices.
After that comes the business purpose loan where someone takes money out of a property they already own and uses the cash for business. This could be to pay business debts like credit cards, to buy another property, invest in a new or already existing business or many other things.
Then there is the refinance of a loan that has a balloon payment that has come due. I have seen a lot of these in the last few months.
The last category is where someone wants a loan for personal use. It could be to buy a home to live in before you can qualify for a bank loan. Sometimes, another property has to be sold before the bank will give you a loan or something needs to be done on your credit and you can’t wait for that to buy the house you really want.
And of course there are other uses. The bottom line is that if you can’t get a bank loan and need a mortgage, hard money is a good place to check and see if it can be used to solve your problem.
It can be used to get creative solutions that other lenders just won’t do.
Most importantly, hard money is a good place to check when all other options have failed. Yes, the rates are higher than other types of mortgages but if the numbers work, it can be a good solution to get you where you want to go.