Tag: hard money loans

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Money

What are Hard Money Loans

Loans come in many forms with their own stipulations and strings attached to it. However, there are a special type of loan that is considered to be a “last resort” by many. These are referred to as hard money loans.

What are Hard Money Loans?

Hard money loans are a form of loan that is commonly used in transactions in real estate. The terms of a hard money loan are what makes a hard money loan different than your standard loan.

Here, the value of the property is used as collateral as opposed to the usual credit rating of the borrower in question. Banks do not make hard money loans, which means that this money is distributed by private companies or individuals. This is why a great deal of risk is associated with hard money loans.

How Does It Work?

Hard money loans are commonly used by people who want to renovate property and then resell the real estate, typically within a year. Hard money loans are typically be more expensive, but this cost is often offset by the fact that borrowers tend to pay it back relatively quickly. On average, these loans last no more than three years.

Advantages of Hard Money Loans

Hard money loans come with a few convenient advantages for the borrower. Arguably the biggest advantage at the borrower’s disposal is that the approval process is very swift. The private investors who loan people money are bale to come to decisions very faster because credit checks are not a part of the approval criteria.

Usually, hard money loan lenders are not as concerned about getting their money back as opposed to other financial institutions because of the high potential in what they may get by reselling the property should the borrower default on repayment.

In addition, hard money lenders evaluate every loan dispensed by case. This means that borrowers will be able to opt for more opportunities to pay the loan back during the time frame afforded to them. Adjustments are often negotiated without complaint from either side.

Disadvantages of Hard Money Loans

The biggest red flag towards hard money loans are the very high interest rates. Unfortunately, these interest rates can prove to be very high, especially when compared to other loans such as subprime loans. Also, since the property is the only means of protection, loans have a much lower loan-to-value ratio.

You must also consider that lenders of hard money may not provide adequate financing for a residence that is already occupied due to specific regulatory edicts.

Hard money loans have been used as a way to get quick and convenient financing. These loans could come in handy for those who do not have the best credit score. With the swiftness of which the loan can be dispensed, it could be a convenient method to avert an emergency.

However, you should consider all of the benefits and risks that come with hard money loans. They come from private parties, and you must be responsible in effectively evaluating the risk so you do not put yourself in a bigger predicament

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finance

5 Types Of Home Loans For Bad Credit

Associates Home Loan

The market for subprime mortgages has shrunk drastically since the 2008 financial crisis. As a result, people with bad credit have found it more difficult to qualify for a mortgage, whether for a home purchase or refinancing. Though the market has changed, many great options still exist for those with lower FICO scores. These five loan types remain widely available.

Hard Money Loans

These loans are based on the equity in a property. As a result, they don’t require a high FICO score. Lenders feel the property value sufficiently secures their interests.

Hard money loans are written based on loan-to-value ratios of 65 percent or less. This means you need substantial equity or a large down payment to qualify. They also close very quickly. This makes them ideal for distressed properties. Hard money mortgages are one of the few loans that can be written while foreclosure and bankruptcy cases are active.

Federal Housing Administration (FHA) Loans

With a minimum credit score of 580, qualification for FHA loans is a good bet when your credit score has sunk. Credit scores are negatively impacted by high revolving debt, bad payment history, and life events like bankruptcy or foreclosure. Though some time may need to pass after a life event, you can qualify for an FHA loan despite any of these credit challenges.

Down-payment requirements of 3 percent make these loans obtainable for average folks. Individual lenders provide FHA loans based on federal program guidelines. Each lender has slightly different credit requirements, so you may need to shop around. For more information on the FHA loan program, visit HUD.gov.

Veterans Administration (VA) Loans

VA loans are designed to promote homeownership loans for veterans. Qualification requirements are remarkably similar to FHA loans. As with FHA loans, VA loans are issued by private lenders based on program requirements, so if you are a veteran, consider shopping around with several VA lenders.

One tremendous benefit of VA loans is the no down payment option. This makes it possible to become a homeowner if saving for a down payment is impossible. In a day and age where the majority of Americans live paycheck to paycheck, this benefit is one of the most important.

United States Department of Agriculture (USDA) Loans

USDA loans are often overlooked because people assume they only apply to rural farms. Though USDA loans are great for purchasing a farm or ranch, they can also be used to purchase a home in town. To qualify, the property must be in a small town or city (population less than 20,000). If you like the country or small towns, USDA loans provide bad credit mortgages. One of the best parts, a 0 percent down-payment option is available.

Credit Union Loans

As explained on BankRate, many credit unions offer bad credit mortgage loans. Some credit unions have requirements similar to FHA loans. Others offer low or no down payment loans. Still, others provide loans regardless of FICO score. The caveat is that not everybody is eligible for every credit union. Your credit union may or may not offer bad credit mortgages.

Despite the decline in subprime mortgages, there are still options available. Some lenders are providing loans with low FICO scores. Generally, lower FICO scores require that the borrower has either equity, a large down payment, or a low debt-to-income ratio unless based on one of the above programs. If you are in the market for a subprime home loan, reducing your overall debt load always helps. Cash also remains king. If you have enough cash or equity, a poor credit score can be overcome. When obtaining a loan is an emergency, you can qualify for a rapid hard money mortgage.

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finance

Where Can I Get a Car Loan With Bad Credit?

bad credit loans

bad credit loans

A car is a necessity that most people will need in day-to-day living. It is much needed for transportation, logistics and your ability to access places for work or leisure. However, some people suffer from bad credit which prevents them from purchasing a car through a loan.

Is it possible to get a car loan with bad credit?

The answer is yes. There are a lot of companies offering several options. If you’re thinking about buying a car by loaning, read further to find out your options given a bad credit score.

6 Ways to Get a Car Loan with Bad Credit

 

1. Hard Money Loans

Hard money loans are an option offered which is connected to your real estate. In this case, your house becomes the collateral for the loan. Based on the value of the real estate you enter, this will be the amount of money provided for your loan. Take this option if you are confident that you can pay your dues on time. The possible risk of losing your real estate may be high if you aren’t sure if you can pay these loans under the designated agreement. Given that, hard money loans are relatively easy on the approval process as long as you have a property to show.

2. Bad Credit Loans

Bad credit loans are an umbrella of options if you’re someone who has a less than impressive credit score. There are several different routes that you can go by to get a loan for a car. One of these bad credit loans is given by the Federal Housing Association. There’s also an option called VA loans, which are regulated by the US Department of Veteran Affairs. Another way is through Subprime loans, which have high rates of approval, but has a quite a steep amount of interest.

3. Peer to Peer Lending

If you feel like you won’t be needing as much cash to purchase your car but still need a loan to complete your payment, you may opt to try peer-to-peer lending. In this option, you can choose to borrow money not from a company, but from a private person who is enrolled in a peer-to-peer lending program. In this scenario, interest rates may be a little higher compared to somebody with a good credit score, but it doesn’t take much required to get to borrow money through this program. Websites such as Lending Club offers this option.

4. Pawnshop Collateral

Another way to gain money for your car loan is through community pawnshops. If you have some gadgets, jewelry, or anything else of value with you, you can use these items to borrow a sum of money for your car payment. Like the non-conventional loans, the interest rates in these types of processes are usually higher, but as long as they verify that your items are authentic, they will be willing to lend you the money you need for your car. Make sure to pay on time, or like the hard money loan, you can also end up losing the materials you gave in exchange for the cash.

5. Consider Pre-approval

To increase your chances of getting a car loan, you can sign up for a pre-approval process through a bank or credit union. Going through this allows the bank to look over your expenses, total income, actual credit score and see which loans you can qualify for. By having this paperwork at hand, you can go to dealers and have a higher chance of approval. Paperwork can work wonders especially if you have an imperfect credit score. This shows to dealers that you have done your research and prepared well to secure a loan.

6. Finding a Great Dealer

Some dealerships are ultimately picky when it comes to their clients. Your goal is to avoid these kinds of dealers. You have to find a dealership that is willing to work with your despite your credit score, and trusts in your ability to deliver. To do this, you can get a list of dealerships in your area and contact them about your situation. Usually, those who are willing will still give you more information despite your status. Given that you find somebody who can agree with you, make sure to secure an income to pay your mortgage on time.

Bad credit doesn’t mean that you lose your chances of getting a car loan. In fact, there are a lot of options available both online and offline where you can secure a payment for your car. Just be sure to read all the fine prints carefully, and be wary of signing off agreements. In this way, you’ll be able to get a good deal and drive your car home.