Hard money loans are short-term loans that use real estate as collateral. These loans are usually given by private lenders or companies, not banks. Hard money loans are faster to get than bank loans. But they usually have higher interest rates and shorter terms.
Steps to get a hard money loan
- Know your project
Before you look for a loan, you need to know your project well.
- What kind of property are you buying?
- How much work does it need?
- How long will the project take?
- How much money do you need?
Having clear answers to these questions will help you when talking to lenders.
- Research hard money lenders
- Search online for “hard money lenders”
- Ask real estate agents for recommendations
- Check with local real estate investor groups
Make a list of potential lenders to contact.
- Prepare your documents
Hard money lenders will want to see some paperwork.
- A detailed plan for your project
- Proof of income or assets
- Information about the property you want to buy
- Your credit score (though it’s less important for hard money loans)
These documents will speed up the process.
- Contact lenders
Contact the lenders on your list.
- What are their loan terms?
- What interest rates do they offer?
- How much can they lend?
- How long does the approval process take?
Take notes on what each lender says. This will help you compare them later.
- Compare offers
After talking to several lenders, look at their offers side by side.
- Interest rates
- Loan amounts
- Fees
- Repayment terms
- How fast they can give you the money
Choose the offer that fits your needs best.
- Submit your application
Once you pick a lender, it’s time to apply. You’ll need to
Interest rates
- Loan amounts
- Fees
- Repayment terms
- How fast they can give you the money
Be honest on your application. Lying can get you in trouble.
7.Property appraisal
The lender will want to know how much the property is worth. They’ll send someone to look at it.
- Check the condition of the property
- Compare it to similar properties nearby
- Give an estimate of its value
The appraisal helps the lender decide how much to lend you.
- Review and sign the loan agreement
When your loan is approved, the lender will send you an agreement.
- How much money you’re borrowing
- What the interest rate is
- When you need to pay the money back
- What happens if you can’t pay?
Read this carefully. Ask questions if you don’t understand something. You might want a lawyer to look at it, too.
- Close the deal
If you agree to the terms, you’ll sign the papers. The lender will then give you the money. Loans usually happen at a title company or lawyer’s office.
- Start your project
Once you have the money, you can start your real estate project. Remember to stick to your plan and budget.
Build relationships with lenders. They might give better terms to people they know and trust. Have some of your own money to put into the project. Hard Money Loans Miami lenders like to see that you have skin in the game.
