There may come a time when you need to borrow money, but you are unsure of all of your options. For some people, looking for private lenders in Texas is a great way to get the funds necessary to handle a variety of financial needs about real estate. A private money loan is a good option whether you are looking for short or long term financing that allows you to compete with an all-cash buyer.
Why Private Money Loans?
Sometimes referred to as a hard money loan, private money loans are available to help you purchase the property prior to refinancing with a conventional, long-term mortgage. An investor that may not qualify for a conventional mortgage might also look for private money lending, especially if they are adding new properties to an already existing portfolio that has four properties or more.
Know the Terms, Rates, and Qualifications
When you work with private lenders in TX, the chances are good that you will find the loan amount is equal to the after-repair-value (ARV) or loan-to-value (LTV). The LTV is primarily based on your property if it is in good condition while the ARV is if the property is in need of repairs.
The private money loans you get are interest-only, which means that the borrower will pay interest on a monthly basis throughout the loan and then pay off the balance once the loan is over. Some of the lenders may charge you a prepayment penalty if the loan is paid off before the due date comes around. Even though the interest rates might be higher when you compare it to a conventional mortgage, private money loans tend to have lower payments each month.
When looking for a loan, you will often see that a hard money lender is looking for at least a 550 credit score. However, the best interest rates often go to borrowers that have FICO scores on the higher end. Depending on the project you have in mind for real estate, some of the hard money lenders will take a look at the potential more than your financial statement.
Is It Right for Me?
Working with private lenders in Texas is usually a good idea if someone is looking for a fix and flip or a short-term investment plan. This is a great way to make sure that you are able to compete with any of the all-cash buyers that are interested in the same property. However, a long-term investment where a substantial rehabilitation or a rental property is not out of the question. It is all a matter of talking with the right private loan company to make sure that you find the right fit based on your needs.
Bay Mountain Capital has the answers to all of the questions or concerns that you may have when it comes to private lenders in Texas so that you can move forward with your next real estate project. Give us a call today at (214) 915-0435, and a member of our team will be happy to go over all of the details with you so that you can get pointed in the right direction.