How To Qualify For a Hard Money Loan And What Documentation is Required
In this modern world, we want to get speedy solutions to all our problems. This is why this fast-paced world has given us options that are better than conventional types. We are comfortable with many unconventional approaches in our life, including loans.
Flip deals with traditional banks?
Not a feasible option!
Then what do we have?
Well, hard money loans are the new normal in the US real estate industry. They are short-term loans with smooth processing. Unlike traditional loans, these hard money loan lenders only focus on the assets of the borrower, and they do not particularly focus on the cibil score of a person.
This is why hard money loans are getting more popular day by day. These short-term loans convince people, and they are comfortable enough with the deals.
You never know what you will get with traditional loans because they are very conventional with loan processing and focus on certain aspects of the loan-giving process.
Why Do You Need A Hard Money Loan?
A hard money loan is needed because the processing is smooth. This is is not the only reason, and you will see enough examples to answer your loan-taking requirements with hard money lenders.
There is no doubt that bank loans are safe and secure. In fact, all the traditional processes are safe for the people, but they are not quick or smooth.
But in the real estate world, you will need to focus on the quick deal rather than the safer deal.
In such a business process, you will need to think about the open and close deals which can make your fortune, and we all know that fortune comes with risks. If you are a business person or investor, you will understand the importance of risk.
Investors need to understand the risks, and they will need to consider quick decisions. With hard money loans, you will get short-term loans for up to 5 years. Apart from that, you will be able to get approved for these loans within a few days, whereas conventional loans will take a long time of up to 6 months to approve your loans.
Will you be able to wait 6 months to grab a real estate deal?
It’s not possible. The real estate world is very fast, and in every instance, you will see a deal getting closed. To ensure such open and closed deals, there is probably no better option than hard money loans.
Important Documents To Consider Hard Money Loans
Now when you are convinced to get hard money loans to deal with real estate opportunities like fixes and flips, it’s time to consider some essential steps.
Hard money loans get approved easily but that does not mean that you can take them without any procedures. Yes, it is quick, but to ensure speed, you have to take the right steps. When you are able to clear from your end with all the steps and required documents, it will be super easy to get approved for hard money loans.
Let’s check out the requirements for qualification.
Photos Of The Property
Digital copies and videos of the property that you want to fix and flip are necessary. The hard money lenders mainly focus on your deal and then approve it. If they see it as a strong renovation or replacement deal, then only they approve your request.
It is useful to take extensive photos of the exterior and interior of the property that you want to replace, remove or repair.
If you want to complete your property report, you will need to consider a proper purchase contract.
This is where you need to show the payoff statement of the existing lender. You can provide a signed copy for better processing.
Two Forms Of Identification
If you have a business entity, you may need to show a form of identification. It can be a link with the Secretary of the State or any other viable person in your place.
It is proof that you are a prominent person in the market to deal with.
Preliminary Title Report
You may need to show the title of the company and the property that you want to deal with. This is a process to invite the hard money lender to consider your deal as a strong and viable deal.
Proof Of Insurance
Consider an insurance agent who can provide you with liability and hazard insurance to deal with the money lender. This is proof to the lender that they will get their money even if a catastrophic loss occurs.
Photo by Kostiantyn Li on Unsplash
When They Get Older recommends that anyone considering a loan takes expert financial advice before making decisions.