subject: The Real Deal with Residential Real Estate Loans [print this page] The Real Deal with Residential Real Estate Loans
Every time the issue of residential real estate loans is discussed, the bad image of the high interest rate surfaces above the noise. Just what is with the high interest rate and why does it overshadow a financing that's actually helpful to scores of real estate investors across the country?
It is important to understand that unlike banks, credit unions, mortgage groups, and other traditional lenders, creditors of residential real estate loans are at a greater risk. Also known as hard money, this mode of financing is riskier on the part of the lender. Traditional lenders have the luxury of time when scrutinizing borrowers; hard money lenders, on the other hand, are pressed for time. When they release a residential real estate loan, it is always part gamble.
These unconventional lenders process loans within a few days a far cry from the usual one-month processing period banks need to screen borrowers and their applications. Within those few days, they must ascertain whether you the borrower have the capability to repay the loan on or before the agreed date. They will look at your credit score but what matters to them is your skill as an investor and the deal you have in hand. The success of a residential real estate loan will depend on how profitable the deal you want to pursue is. If the lender thinks it is worth funding, they will release the financing you need.
They are at a hurry as well because their income, which will come from the interest you will pay them, will depend on the real estate deal you have. If you lose the deal to competition because you didn't have apt financing in place, the lender will also lose an opportunity to make money. Sometimes they will approve loans even if the borrower had a history of foreclosure in his credit history. If you ask traditional lenders, they will say financing such deal is simply too risky. But in the first place, that's the reason why hard money lenders impose higher interest rates for residential real estate loans. They fund loans that no bank will finance.
Now to choose a residential real estate loan over other forms of financing that come with lower interest rate is always the decision of the investor. But think of it this way: A high-interest loan will let you make money with a deal. A low-interest loan will make you wait in uncertainty and increases the possibility of you losing the deal to competition.
If you think your choice is right, go to RehabHardMoney.com right now.
