Virginia Hard Money Loans
Once source that Virginia real estate investors often use to obtain finance for real estate investment projects are hard money loans. The way hard money loans are obtained is different than the way other mortgages are. These are privately funded, short term, loans almost specifically for real estate investing by purchasing foreclosures and other under valued properties.
Hard Money Loans are not intended for permanent financing. The upfront fees and interest rates for hard money loans are not cheap, so should be paid off quickly, as soon as your investment property is completed or flipped. Loan costs for hard money financing are usually between 11 and eighteen percent , and have up front fees from 2 and 4.5 points up front.
Purchasing Virginia investment properties without money down is hard to do, especially with the way the real estate market and financing have changed, but it is possible if you can prove that the value of the real estate is worth substantially more than the amount borrowed .
When should hard money financing be used for Virginia Real Estate purchases?
Hard money loans are beneficial for short term financing and real estate investing. They should only be used when the VA property that will be acquired is a slam dunk and an incredible deal. Hard money loans usually will be only given if the investment is worth at least 20% more than what the amount borrowed . If a property is going to be kept for an extended period of time the Hard Money financed should only be used as a gap loan, to bridge the gap until the investor can get sell the property or get a long term mortgage loan.
At rare times, hard money can be used to save default home owners who need to do something to prevent foreclosure. Because hard money lenders generally base the loan on the value of the property, and not on the credit worthiness of the borrower, they will loan to people with poor, or bad credit, if the distressed property has significant equity. Hard money loans for distressed borrowers is usually just a band aid for a more serious financial problem. Most private hard money lenders in Virginia will typically initiate foreclosure with very little mercy. They have no problem taking a house with lots of equity from struggling homeowners who fail to make their hard money payments.
What should you look for in Virginia hard money lenders?
When selecting a Virginia hard money lender you need to consider the time it is going to take to obtain the loan, the cost of obtain the loan, the monthly interest rate, and other terms. You should also take into consideration how liquid the loan will be, how quickly they can get it to you if you find a great deal that needs a quick closing . If the hard money lender takes several weeks to get financing to you, then you’ll miss out on the deal, and there is no point of getting a hard money loan after all. Your investing efforts might as well be used in different ways that require less risk.
