Fulfill the American Dream with a Residential Loan

Fulfill the American Dream with a Residential Loan

With the current state of the housing market, many consumers nowadays prefer renting apartments and other similar properties to owning a home. According to them, being a renter is more practical than being a homeowner because they don't have to deal with a property's cost of repairs and maintenance. They also don't have to worry about mortgage payments and other similar expenses.

While it is true that more and more people are abandoning the American Dream of homeownership, there are still people who are keen on buying a house for themselves. And thanks to a residential loan, even cash-strapped consumers can secure the funds needed to make the American Dream come true.

If you're one of the remaining few who want to own a home or simply invest in residential real estate, there's good news for you. There are various financing options that you can use to buy the house that you want. A good example is a hard money loan.

Hard money loans are a type of asset-based financing wherein a property's after repair value, or ARV, is used to verify a loan's eligibility as opposed to traditional lending criteria. This type of lending is mostly used by real estate investors and home buyers who can't qualify for bank loans and traditional financing. It is because as long as a home buyer is borrowing money for a house with a high ARV, he can get the funds he needs regardless of his credit rating or his current financial status.

One of the advantages of using this particular residential loan to fulfill the American Dream is that you don't have to worry about the cost of repairs on the property that you want to buy. Why, you ask? Here's a little explanation.

Hard money loans have a loan-to-value ratio of about 65%. Thus, if you're going to buy an existing property worth $30,000 but has after repair value of $100,000, you'll get $65,000 from the hard money lender. If you're going to subtract the purchase price of $30,000, you'll have a remaining balance of $35,000, which you can use to pay for the repairs and renovations, as well as other related expenses.

However, a known disadvantage of using hard money loans is that securing them can be quite expensive. Hard money comes with higher interest rates and lenders ask additional origination fees for them to process your loan application. But if you really want to fulfill the American Dream and you can't qualify for a traditional residential loan, obtaining hard money is your best option.

For more information on using residential loans to invest in real estate, visit www.RehabHardMoney.com.

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