Would hard money work for this deal

3 Replies

im interessted in investing in my first homes the list price of the homes is valued at 289 and the seller wants 10,800.00 down could i do i hard money lender for this property.

@Kicia Brooks  

Hard money lenders are expensive (read: high interest rates) and are really only intended for short/medium term financing. You would use a hard money lender if you had exceeded the maximum number of regular mortgages allowed. You would get hard money if you were planning on flipping and were going to cash out in a short space of time. Hard money is a true statement. Hard money lenders provide an invaluable service and they help real estate investors do their thing but they work in specific situations.

For your first home, start with a 20% downpayment and a regular mortgage. If you're not there yet, work on getting your credit score up from good to awesome. Save as much money every month as you can to scrape that downpayment together. Hey, get a second job if this is what you want more than anything else in the world.

Are you saying the property is listed for $289,000 and the seller is willing to sell with owner financing with $10,800 down?  If so, where does hard money come into play?  If you mean would a hard money lender lend you $10,800 for the down payment, then the answer is absolutely not.  HMLs will rarely do a second position loan and certainly would not do it for the down payment.

If this is a house you're going to live in (the only think an investor should refer to as a "home") then HMLs will rarely lend at all.  Residential mortgages are highly regulated and that's not a game HMLs play.

If its an investment, HMLs will lend, but typically only up to 70% of the purchase and maybe part of the rehab.  And the rates will be VERY high, 12-18%.  And the term short, 6-9 months.  So you have to plan to sell or refinance.

Originally posted by @Wendy Noble :

@Kicia Brooks  

Hard money lenders are expensive (read: high interest rates) and are really only intended for short/medium term financing. You would use a hard money lender if you had exceeded the maximum number of regular mortgages allowed. You would get hard money if you were planning on flipping and were going to cash out in a short space of time. Hard money is a true statement. Hard money lenders provide an invaluable service and they help real estate investors do their thing but they work in specific situations.

For your first home, start with a 20% downpayment and a regular mortgage. If you're not there yet, work on getting your credit score up from good to awesome. Save as much money every month as you can to scrape that downpayment together. Hey, get a second job if this is what you want more than anything else in the world.

 Great Advice - 

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