Construction Loans

Why Choose Hard Money Loans for New Construction

If you’re in the construction or real estate business, you know how imperative it is that you act quickly when an investment opportunity presents itself. New construction loans through traditional banks can take time to be approved and there’s often a mountain of paperwork to go through.

Hard money construction loans are a viable alternative that let you renovate an existing structure or build a home from the ground up. Much more than your average fix-and-flip loan, new construction loans give you the funding you need – and faster than you might expect. Keep reading to learn more.

Low Credit Score Is Not an Issue

One of the best reasons to consider hard money loans for new construction is because low credit score is not a problem. Although you’ll ideally want to have a credit score of 620 or above for the best possible rates, hard money lenders look less at your credit score or history and more at the collateral you’ve secured the loan with (often other real estate).

Plus, your new construction hard money loan is evaluated personally. You’re never treated like “just another number”, the way you’d be treated at a bank or credit union – if they’d even entertain the idea of a new construction loan!

Let’s face it, the new construction real estate market is a roller coaster, and when investors don’t want to invest in new constructions, banks take a very hands-off approach and are reluctant to approve loans for new construction. It’s not your fault – they just want to focus on where they can make the most money.

Hard money lending is different. Hard money lenders, also known as private money lenders, look at your opportunity on its own merits. Rates are competitive and you can get up to a 100% advance rate on construction in addition to 50% of the land value as an advance rate on your purchase.

Good Deals Move Fast! Don’t Be Left Behind

The biggest reason to invest in new construction is because good deals move fast. Trying to go through a traditional lender to get the money you need can be a cumbersome and slow process. There’s often lots of paperwork and eagle-eyed loan officers scrutinize every aspect of your credit history.

Hard money lenders take a different approach. They understand the fast pace of the real estate and construction industry, and can close loans in as little as 48 hours, with most taking 10-15 days to be fully funded. You could find out if you’re approved in as little as 24 hours.

Plus, the flexible underwriting criteria lets you secure funding when other institutions wouldn’t give you application a second glance.

Fast, Easy and Competitive

The whole process of hard money lending is admittedly different than a traditional new construction loan – but you may be pleasantly surprised by the differences. Experienced contractors are encouraged to learn more and discover how competitive rates can be. Interest rates range from 10-12% and 2-3 points and loan amounts can go as high as $2,000,000.

No matter what your new construction vision is, a hard money loan can help make it a reality. The process is fast, easy and can give you the edge you need in a competitive market. Of course, it’s understandable that you may have questions. That’s why it’s vital that you talk with an experience real estate investment team that has worked with new construction private money loans. See what kind of rates you could get and then start planning. You can get funding for your new construction project even sooner than you think! Contact Lending Bee at (818) 584-2424 or fill out online contact form today.

Related Information: Land Loans | Commercial Loans

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