If you are a typical borrower looking for financing for your primary residence the first thought is to apply with your local bank or credit union. The interest rates are typically competitive and generally lower than private lenders. However, credit rating is a primary factor in the loan decision and you have to meet certain underwriting guidelines. If you don’t have good credit with easily documented income sources your loan application can be denied.
Hard Money loans are customized to borrowers' needs based on the fact that you have sufficient capital, generally around 20-30% down of the purchase price of the property and your ability to repay the loan.
Private money lenders or Hard Money lenders in Houston are quite different from bank loans. Below you will learn 10 reasons why Hard Money loans in Houston are here to stay:
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Professionalism
Houston Hard Money Lenders are professionals who are ready to work with you to help guide you through the entire loan process and offer personable real estate investing support. You are not just another loan applicant, they are inclined to help and counsel you through the entire process. Whether you are a seasoned investor or a First time homebuyer, there’s nothing like the local lender that offers a one stop shop for all your financing needs.
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Leverage
As an investor or an individual looking to secure financing to purchase your 1st or 2nd home, looking to refinance an existing loan that has become due, or looking to cash out for repairs, remodeling, or debt consolidation; a Hard money loan in Houston would give you the leverage you need to accomplish your goals.
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Programs/ Guidelines
Your application is assessed on its individual merits typically by the decision maker who looks at a range of factors like your current means of income, your ongoing ability to repay the loan, where the property is located, and the size of your deposit. Nontraditional income and self-employed sources are more easily accepted by a Hard Money Lender in Houston, Tx. Income is analyzed differently and possible exceptions are made to past credit flaws.
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Eligible Properties
Hard money lenders in Houston will finance all types of properties that fall outside of the traditional single-family homes including 1-4 units. Their parameters include mixed-used properties and commercial properties. These properties are usually going to be used for the borrower’s principal residence or used for the borrower’s business.
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Credit Rating
Scores are considered but each hard money lender in Houston sets their own criteria for acceptable credit and will have a more common sense credit review. Major banks use an automated credit scoring process which means your application may be denied simply because a computer gives your application a score based on past credit history. If you have collections, judgments, or have filed for bankruptcy in the past it can be difficult to qualify with a traditional lender. Hard money lenders in Houston are more concerned with assessing why the financial hardships occurred and so, their approval is based on their lending policy.
- Underwriting
Hard money lenders in Houston do not use automated underwriting when rendering loan approvals. These loans are based on the experience of the private hard moneylender in relation to the borrower’s repayment ability and the property being financed. The final outcome is not made by the government agency, mortgage insurance company, or an employee at a bank. The chances of being approved for a hard money vs a conventional loan are greater and offer the flexibility you need.
- Liquidity
If you own real estate and you need to get some money out of it, because your business needs some capital or if you find a good opportunity and need to close fast and secure long-term financing later; a hard money loan will give you the liquidity you need to obtain the capital you need, fast.
- Portfolio Lender
Houston local hard money lenders not only originate loans, but they also hold a portfolio of loans instead of selling them to the secondary market. A Houston private money lender will give you a quick turn-around without the headaches of traditional lenders, no upfront fees and closings in 7-10 days.
- Borrower Types
Loans can be made to: Individuals, Corporations, LLCs, Partnerships, and Estates Etc. There is no borrower too big or too small that can qualify for this broad range of borrower types
- Loan to Value Ratios
Traditional lenders will lend on the actual value “AV” of the property in its “as-is” condition, which would require you to put in a substantial amount of cash for a property that is in need of repairs. If your goal is to finance your primary residence but it’s in need of repairs, a hard money loan would be the best way to purchase and finance the repairs all at once. A Hard money lender can finance based on After repair value “ARV” of the property, typically 70% of the after-repair value.
To conclude, no matter what your loan scenario is; or what your credit situation is, a hard money loan may help you finance your next project regardless of your credit flaws, property type, and/or condition, whereas in other cases you would not qualify through traditional FHA or Conventional financing.
If you’d like to find out more about our wide range of financing options, please contact Jim, Joe, or Jeff Emerson at 713-682-4400. Or click here to fill out our online application form. It’s quick, and secure and we’ll be in touch with you shortly to discuss your options for hard money loan in Houston.