There is a wide range of loans for real estate in New York. The type of loan you choose depends on the borrower’s needs, the purpose of the funding, and whether they have excellent credit.
Choosing a loan is not always an easy task. Several factors should be considered before making a final decision. Types of Loans for Real Estate will help you understand your options and your financing decisions.
Hard Money Loans
Many individual and business lenders offer hard money loans for real estate investments. Investing in investment properties can be easier with these loans because they are much faster to secure. In addition, when approving a hard money loan, hard money lenders will look at the value of the property you plan on buying rather than your credit score.
These real estate investment loans come with specific formalities, documentation, and guarantees. Besides being short term, hard money loans also have higher interest rates (up to 10% greater than conventional loans).
This means that these loans for investment properties cannot be used to buy any income properties. A hard money loan is an excellent option for financing properties you plan to buy cheaply, renovate, then sell at a profit.
Fix-and-flip real estate investment strategies are popular among property investors since they offer quick returns in a short time rather than the collection of monthly rent checks. Therefore, the fix-and-flip loan is a better financing option if this is your preferred investment strategy.
Home Equity Loans
Investment loans use a homeowner’s equity to borrow money to purchase a second home or a rental property. They finance homeowners based on how much equity they have in their home and its current worth.
The lender gets to repossess the investment property to satisfy the debt if the real estate investor does not repay the loan. Responsible property investors should therefore consider home equity loans for investment properties.
Private Money Loans
A private money lender is someone who has extra funds and wants a good return on their investment, as opposed to a hard money lender. You may find private money lenders amongst your family, friends, neighbors, colleagues, or even other property investors you have met in your real estate investing career. Investors who banks have rejected can use these loans for investment properties. However, private money lenders don’t offer loans for investment properties unless they are backed by a promise of payment or an existing mortgage. Thus, Investors who fail to repay their loans in due time can have their investment property repossessed by private moneylenders.
Conventional Mortgage Loans
Mortgages are loans provided by banks or mortgage brokers to invest in real estate. Besides state-specific requirements, conventional mortgages also require investors to meet specific standard requirements. In addition, the type of conventional mortgage loan you qualify for will depend on the type of credit score you have and the history of your credit.
Money isn’t an obstacle if you know where to look to enjoy the perks of real estate investing. POM (Peace of Mind) Capital & Funding Services is a reliable and trustworthy company that offers a wide variety of services to those in the industry.
If you would like to any of our products with an experienced broker, call POM Capital & Funding Services at (631) 354-9290 or write to us at [email protected] to schedule a free consultation with our team.
POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.