There are a lot of reasons people turn to both secured and unsecured loans. For people who do not have the best credit score and history hard money rehab loans or secured short term loans may be the way to go when they are looking to get into commercial real estate investing or for other purposes. There are some things people who are looking to get secured short term loans should do to be successful.
- Decide what asset you will use. If you own several properties or have other assets, you will need to decide which one will be used as collateral for your secured short term loans. Experts recommend against using your home to secure your loans because if there is any chance you will not be able to pay, you risk losing your house. Before you take that deed to hard money mortgage lenders, you should make sure that is your only option and that you are going to be able to make the payments on time. If you are really sure that the commercial property investing opportunity will start to make money right away, it might be a good idea but you need to be really careful.
- Try local community banks and credit unions. Before you take out secured short term loans, talk to these other financial institutions. They have a stated goal of helping people and businesses in the community. They want to work with people and companies that are investing in the community. If you do not belong to a credit union, you should still go in and talk to them. You can talk to the Better Business Bureau to find some that offer loans to locals to invest in commercial real estate.
- Spend some time on your due diligence. When you are looking at real estate investment lenders, you need to take your time. One of the main differences between secured and unsecured loans is that once you sign the paperwork for secured short term loans, you will get your money pretty quickly. That is very different than when you get a traditional loan and that time frame is a lot longer. The reason this matters is that this allows you to take your time looking at different hard money lenders.
- Patience is your friend. Whenever you are dealing with commercial real estate investing, whether you are looking at secured short term loans or not, you have to have patience. Once you have found some lenders you want to talk to about your loan, take a deep breath and do some more research. Do some comparisons of the interest rates that are offered. Typically, secured short term loans come with interest rates that are between 15 and 18% or more. Most hard money lenders look for borrowers to put up assets or property that will be worth between 30 and 50% of the loan. You need to do some research into the terms that each lender will offer before you apply for any loan. The more of the loan will be covered by your asset or your property, the lower the interest rate is.
- Do not be afraid to negotiate. Some people have the idea that if their credit is not the best, they have to accept any terms for secured short term loans that they are offered. This is not true. You have a lot of options and have to keep your best interests in mind at all time. You can get a decent deal that may help you with that commercial real estate deal that you cannot pass up. Do not let any lender try to bully you into a loan with terms that are just bad.
- Look past the interest rate. Yes, getting a good interest rate is important but there are other terms and conditions that you will need to understand and comply with when you get secured short term loans. Before you sign anything, make sure you are totally clear on what is expected of you and what will happen if you miss a payment.
There are a lot of great reasons to take out secured short term loans but you have to be very careful.