Homebuyers and real estate investors sometimes overlook hard money loans as an option. One of the reasons for this is because there are so many myths and misconceptions surrounding them. Let’s correct some misleading and incorrect beliefs and assumptions about hard money loans.
MYTH: Interest rates for hard money loans are unreasonable.
FACT: Interest rates for hard money loans can be affordable.
Interest rates for hard money loans are higher on average than they are for other types of loans. But this is because the lender is assuming more risk and is rapidly funding the loan. Nevertheless, some hard money loans feature competitive rates, especially for borrowers with strong profiles.
Some lenders also offer more competitive rates than others. As a Florida mortgage broker, we can search a wide network of lenders to help you find affordable rates.
MYTH: Only people with bad credit buy real estate with hard money loans.
FACT: There are other benefits to hard money loans.
Hard money loans are not only used by people with low credit scores. Often, investors use them when they want to close quickly, since the hard money loan process is streamlined. The mental association some people have between hard money loans and desperation is simply not accurate.
MYTH: You can only buy a distressed property with a hard money loan.
FACT: Hard money loans can be used to buy properties in good condition.
The reason this myth exists is because you can use hard money loans to buy distressed properties that might not be eligible for other types of financing. But that does not mean you must buy one. You can buy a property in good condition with a hard money loan.
MYTH: There are hidden fees for hard money loans.
FACT: Reputable hard money lenders do not hide fees.
Only disreputable lenders would attempt to hide fees. So long as you are borrowing from a reputable, trusted lender, that would never happen. All fees will be listed for you before you sign the agreement.
MYTH: Hard money lenders are unsafe.
FACT: Hard money loans are regulated and safe.
A lot of people believe that there is no regulation for hard money loans, and that hard money lenders can do whatever they want. But that is not true. In fact, you should always check to make sure that a lender is licensed and regulated before working with them.
Licensed, regulated lenders are not allowed to engage in predatory behavior. They need to offer fair, transparent rates and terms. The framework of laws they are required to operate within to maintain their licenses protects you as a borrower.
Apply for a Hard Money Loan in Miami or Beyond
A hard money loan could be the key to helping you overcome obstacles to buy property quickly. To begin, please give us a call at (786) 220-1100 to schedule your consultation. We can help you buy commercial or residential real estate in Miami or anywhere in Florida with a hard money loan.