Hard money loans can be cheaper than other types of mortgages because they are smaller in size, have lower monthly installments, and carry shorter repayment periods. Hard money lenders typically charge about 20% to 25% interest on non-recourse loans, but you can save even more if you know the loan terms upfront because the loan term determines how much interest you’ll pay.
Your Home As A Source Of Income
You can either turn your home into a rental property or a flip.
How to Turn Your Home Into a Rental Property
If you want to turn your home into a rental property, you need to have a lease that’s legally binding. The lease should specify that the tenant has to pay a certain amount of rent every month, and the lease should state that the tenant can’t do anything to the property.
If you have a mortgage on your home, you should make sure that you have a mortgage that’s assumable by the landlord. This means that if the tenant doesn’t pay rent, the mortgage lender will give the lender the right to collect the money that’s owed from the tenant. When the tenant stops paying rent, the landlord should contact the tenant’s mortgage lender and the tenant’s credit card company and request that the payments be put on hold.
How to Turn Your Home Into a Flip
You can also turn your home into a flip. A flip is when a property owner buys a property that has already been sold. If you buy a property that’s already been sold, you’ll have to buy it at a discounted price.
You can also buy a property that’s already been sold and then you can resell the property for a profit. Lenders can find flippers through hard money lenders, real estate agents, or other lenders.
How to Calculate a Discounted Price
To calculate the discounted price of a property, you have to find the fair market value of the property. Fair market value is the price that the property would sell for in the open market.
You can calculate the fair market value of a property by dividing the total value of the property by the total number of units in the property.
Read here: Getting Hard Money Loan House
The 7 Steps To Getting Your Hard Money Loan Approved
1. Get Pre-Approved
You can find lenders on hard money loan websites or through real estate agents.
2. Get Pre-Qualified
You can apply for a loan online, through the mail, or in person.
3. Apply for a Loan
You can apply for a hard money loan in a bank, credit union, or online.
4. Lender Sends a Request for More Information
After you’ve been pre-qualified, the lender will send you a request for more information.
5. You Provide the Lender with the Documents You’ll need to provide the lender with copies of your:
- Income tax returns
- Employment history
- Bank statements
The lender will then send you a letter with the status of your loan application.
6. You Pay the Lender
After the lender receives the requested documents, they’ll send you a letter telling you when they’ll make a decision on your loan application.
7. The Lender Approves the Loan
The lender will either approve your loan or send you a letter with a reason for why they’re rejecting your loan.
5. Send in the Information
The lender will review the information that you’ve provided.
6. Lender Approves the Loan
The lender will approve the loan.
7. Close the Loan
The lender will provide you with a closing date.
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