When it comes to buying a house, cash is king. A cash offer is an attractive option for sellers, as it means there is no risk of falling funding from the buyer and, generally, a faster closing time. But what if you don't have the cash at your disposal? In this case, you can use a hard money loan to buy the house outright. Hard money lenders offer a viable way to pay for a home with cash.
A hard money loan uses all the information, including any possible renovations you would make to the home, to get your loan amount. The problem is that traditional mortgage lenders will almost certainly deny your loan application, because homes that only have cash tend to have underlying problems. A hard money loan is the best way to finance cash-only homes because you don't have to worry about writing your cash and having no liquidity. As long as investors know the current value of the home and the value after repair based on feedback from a licensed appraiser, the loan can generally be closed in as little as one week.
If you're looking for a home in a booming housing market and you're worried that a cash buyer will hit you in a bidding war, financing with cash offers might be a good option for you. When you finish and sell the house, you repay the hard money loan and enjoy the returns on your investment. In addition, applying for another 30-year loan or refinancing at a higher interest rate could mean you pay more in total interest. Believe it or not, smart home buyers can make a cash offer, even if they plan to apply for a mortgage.
A home equity loan, on the other hand, is a second mortgage that doesn't replace your first mortgage and can sometimes have a higher interest rate compared to a cash-out refinance. Whether you get approved for a Decide Now mortgage or go through a more traditional contingent loan application, the process is more or less the same. In conclusion, if you don't have the cash at your disposal to buy a house outright, you can use a hard money loan to finance it. This type of loan uses all the information about any possible renovations you would make to the home to get your loan amount and can generally be closed in as little as one week. Smart home buyers can also make a cash offer even if they plan to apply for a mortgage.