Hard money credits are fast becoming temporary solutions for procuring finances when other possibilities are not available. The best part about a hard money loan is that it lasts for only 1 to 3 years in maximum cases.
Thus, one also needs an exit strategy to be adopted to come out of the hard money loan situation. Many of the creditors offer you a short payment period having high-interest rates as compared to traditional creditors. Thus, it is always necessary to know beforehand to know about exit options while applying for a hard money loan.
Here are some options available for exit strategies to come out of the hard money loan condition.
Experienced Real Estate Financiers
Real estate investors who have an experience in house spinning are often able to forecast for how long they need to spend on a particular property. These kinds of borrowers are thus able to make use of their experience to plan payment of their loans.
Self Employed Borrowers
Individuals who are self-employed declare a particular income in income tax returns, and thus they are not able to qualify for conventional loans. These borrowers then apply for hard money loans while planning to take out the loan with a motive of filing their income taxes showing a higher income for a period of two years.
Private Homeowners with Short Sales
There are some private homeowners who occupy a property and have enjoyed a short sale in the nearby past. These owners often take out the hard money loans with the belief that they can easily refinance their homes though conventional lending process as soon as the sale date comes up.
Unconventional Down Payment Funds
When it comes to additional down payment, if it has been given by your relative or friend, it is not a gift. In the situations concerning conventional loans, gifts which are coming from close family members are acknowledged. Gifts which are given by friends are recognized as personal loans. Once you understand this scenario, you can find ways to make use of the gift to manipulate the system for accessing loans at low-interest rates.
Remember, a concrete exit strategy can assist you in coming out smoothly from the hard money loan situation. With the above-mentioned options, it becomes easy for you to choose the best choice available as per your requirements.