There’s a reason why so many people are attracted to the real estate industry. It is probably the only industry where gaining a large amount of money in a short time is actually possible. However, it’s also one of the most common areas to lose money. This is why so many aspiring flippers and homeowners will seek a real estate loan to get things started. Real estate loaning can be a daunting experience if you don’t know what your options are. Thus, the following list includes some of the most common types of real estate loans.
If you’re a buyer seeking to purchase a home to live in, you have the option of a conventional loan. This type of loan is pretty much the basic of basic loans as it provides you with precisely what you need. Note that these loans are provided to buyers with good credit scores who don’t need to fix much on the property.
Now, let’s go to another area of real estate. This usually involves builders or real estate investors. Through a blanket loan, developers and investors can use the money to either begin construction on a home or divide the land to sell off to other real estate investors.
Hard Money Loans
If the prospect of finding homes in poor condition and flipping them for a profit is attracted to you, then a hard money loan is your best bet. Unlike a conventional loan, these are much easier to obtain but can also be more expensive. Now, they are easy to get because the funds being provided to you by the bank are usually those of other investors. Also, the bank won’t look too deep into your finances but rather in the property’s potential. This will determine if the funds are a worthy investment.
Let’s say you don’t have the best of credit score, nor do you have the 20% to put down on the home. A portfolio loan can help you get into a home much more comfortably and faster than other loan types. In this situation, your loan is kept within the bank’s system, but it comes with a price. You are likely to be charged a high-interest rate throughout the term of your loan.