A hard money loan is a type of loan that commonly uses the property as collateral. Owner occupied hard money loans Michigan typically provide hard cash rather quickly in a few ways and they often come from private lenders instead of traditional lenders.
Hard money loans are considered the last resort due to their predatory reputation. Despite being fast, the lenders set high-interest rates that make you end up with a huge amount of total interest. Before deciding to get a hard money loan for yourself, take a closer look at these pros and cons.
Owner Occupied Hard Money Loans Michigan Pros
If you are in a cash crisis and you need money urgently, hard money loans offer an instant solution. The lenders often offer a quick closing time so you don’t necessarily need to deal with a tedious and complicated process. Here are more advantages of owner occupied hard money loans Michigan:
- Suitable for Individuals with Bad Credit Score
Individuals, investment companies, or nonbanking businesses that provide hard money loans typically don’t consider your credit score and credit history. They pursue a fast closing time so they try to make the process much easier.
- Ideal for Hard Times
Whenever you are in hard times and you desperately need a lot of money, owner occupied hard money lenders nationwide are there to save your neck. As long as you have assets as collateral, the lenders won’t consider your financial position.
Hard Money Loans California Owner Occupied Cons
On the other hand, owner occupied hard money loans Michigan comes with shortages. Here are hard money loan cons to consider before you apply:
- High-atInterest Rate
Since the lenders are not taking your credit score into consideration, the loans are considered riskier. This is why it commonly comes with a higher interest rate than conventional loan types, which may cost you a larger sum of money.
- Risk of Losing Your Assets
In hard money loans, you need to use your hard assets as collateral but the most common is property. It puts your assets at risk—if you default, you will lose the asset you put to secure the loan.
- You Can’t Borrow 100% of the Asset Value
The hard money lenders won’t let you borrow 100 percent of the total value of your asset. Instead, you may borrow up to 75 percent of the value so the lenders still have room if you default.
All in all, owner occupied hard money loans Michigan come with positive and negative sides. Consider every aspect before you make a major decision so your financial situation doesn’t get worse.
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