Are you ready to buy a home, but do not want to wait the amount of time that it usually takes to obtain a conventional home loan, or are you having difficulty securing a mortgage with a traditional lender? In certain situations, hard money loans can sometimes be an advantageous financing option because they offer a faster pathway to receiving a mortgage by using the property itself as collateral. If you are interested in learning more about the mortgage options available for you in Kansas City, Missouri, KC Investor Funding can help. Read on to learn more about buying a property quickly with a hard money loan.
What Is a Hard Money Loan?
A hard money loan allows a homebuyer to borrow money without going through a traditional lender and instead is secured by real property. The process of applying for a traditional loan can be a lengthy process because lenders require a borrower to demonstrate that they can pay back a loan through verification of steady income, by having a low debt-to-income ratio, and by having a decent credit history. Since hard money loans are backed by a tangible asset, lenders are less concerned with documentation proving that you can repay the loan because they are able to use the property as collateral to get their money back if the borrower defaults on a loan. Hard money loan terms are based on the value of the property and are shorter than other traditional loans. Since they do pose a higher risk to lenders, they generally have higher interest rates than a traditional loan.
What Are The Advantages of a Hard Money Loan?
There can be several benefits to obtaining a hard money loan. One advantage is that the loan approval process takes less time than a traditional loan because lenders do not need to evaluate a borrower’s credit, tax history, etc. because they are more concerned about a property’s value since it is being used as collateral. Hard money loans also offer flexibility because lenders will analyze each transaction on an individual basis and can make accommodations to the terms to meet a borrower’s needs. Also, since hard money loans have a low loan-to value ratio, it is not necessary to make a big down payment, unlike with a traditional loan.
Applying For a Hard Money Loan
There are many financing options available to make it possible to purchase a home in addition to traditional mortgage financing. If you are interested in learning more about buying a home with a hard money loan in Kansas City, Missouri, contact KC Investor Funding today for a consultation. We can help you determine the best financing option for your unique situation.