Considering applying for a hard money loan in Miami? These types of loans are useful for a variety of purposes. These include buying a home when you do not have perfect credit, fixing and flipping real estate, and other applications. But you may be wondering whether a Miami hard money loan is worth it. Let’s take a look at some of the pros and cons of these types of mortgages so you can make a more informed decision.
Pros of Hard Money Loans
First, here are some of the advantages of hard money loans:
- You do not need an ideal credit score. One of the main benefits of hard money loans is that their qualification standards are relaxed compared to regular loans. So, even if your credit score is stopping you from getting another type of loan, you may be able to move forward with a property purchase with a hard money loan. This may be a good solution if you believe you will be able to raise your score over the next few months or years to the point where you can then switch to a different type of mortgage with a lower rate.
- You can get the financing you need fast. The underwriting guidelines for hard money loans are light and flexible. Since the process is simplified, it is also fast. So, if you need rapid short-term financing, for example to fix and flip real estate, a hard money loan is ideal.
- A hard money loan can be tailored to your specific needs. The increased flexibility in underwriting a hard money loan may allow a lender to take a more individual approach with you than would be possible with a different type of mortgage.
Cons of Hard Money Loans
Next, here are some of the disadvantages of hard money loans:
- Rates are higher. The biggest drawback of a hard money loan is that the greater flexibility in approval comes at the cost of higher interest rates. Because those higher rates make these loans expensive, they are designed for short-term use (see below).
- Loan terms are short. You will discover that hard money loans usually have very short terms, i.e. up to 5 years. If you are looking for a long-term financing solution, you will need to choose a different product. That being said, you can use a hard money loan for now while you work toward qualifying for a long-term mortgage.
- You may need to do some extra research when choosing a mortgage company. No matter what kind of loan you are applying for, it is important to research any company you are thinking of working with. But it becomes even more important if you are taking out a hard money loan. When customers need financing in a hurry or need to get around credit score requirements for prime loans, they may be in a more vulnerable position to predatory lenders. That does not mean that there are not many legitimate lenders that offer hard money loans. It just means that doing your homework becomes more vital.
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Whatever your needs, we can help you find the hard money loan that will give you the means to accomplish your goals quickly and easily.
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