Have you ever heard the term that cash and hard money loans are one and the same? While this can be true in some cases, they are different from each other. Be familiar with how you can utilize both in the real estate market and what specific situations call for each payment type.
What Does Cash Mean for the Housing Market?
Cash is a simple concept of money that we all know and understand. This type of payment implies that you already have a certain amount of money in your possession. Sellers of homes prefer all-cash offers because it excludes a financing contingency.
When you make an all-cash offer on a home, you will most likely be at the top of the seller’s list. However, if you plan to invest in multiple properties, you will run out of cash more quickly and will be unable to do everything in your plans for the homes.
What Do Hard Money Loans Mean for the Housing Market?
You may be unfamiliar with what hard money loans can do for real estate. Hard money loans are unlike traditional bank loans, and the turnaround time to receiving payment is quick because the lenders do not need an array of requirements to give you the loan. However, these loans are usually only used for homes that need fixing or for investing in commercial properties.
Buyers choose this type of loan when they do not have enough cash or choose not to use their own money. Hard money loans are much like cash because they are unlike bank financing and because you can close on a home just as quickly.
So, What’s the Difference?
The difference between hard money loans and cash is that one form of payment is physically yours, and the other is borrowed that will eventually need to be paid back. Borrowing money from hard money lenders in Tulsa will give you a payment amount of the property value after repairs, meaning they will provide you with more than you initially need to achieve a fix-and-flip home. You can only use this type of loan for specific properties, and it will not work for buying a traditional family home.
So, when you attempt to fix and flip a house and do not want to use your own cash to pay for the property, you can turn to hard money lenders to help fund your project. While both are different, they can work the same in quickly closing deals on homes you want to fix up or invest in. Contact us at Hard Money Partner to discuss your loan options when the time is right for you.