Most financial experts will tell you that real estate is a
sound investment. Real estate has consistently earned money over time and is a
way to help build your investment portfolio and personal wealth. However, for
many individuals with bad credit, real estate investing has been beyond their
reach using traditional loans. Approximately 42.5 million Americans have a bad
credit score and are considered sub-prime borrowers. If you are in the market
to start real estate investing but you have bad credit, there are a variety of bad credit home loans Texas mortgage
brokers recommend.

One type of loan available to sub-prime borrowers is a hard
money loan. A hard money loan is a specialized type of real estate backed loan.
The lender is an investor or group of investors rather than a bank. The lender
offers short term capital loans to purchase investment properties. The term of
a hard money loan is generally no more than two years and is designed to make
money on real estate for both the borrower and the lender. Hard money lenders
focus on the value of property being purchased rather than the assets or credit
score of the borrower. For this reason a hard money loan is an invaluable
opportunity for an investor looking for bad credit home loans Texas mortgage brokers recommend to purchase a property as a short term investment.

Hard money loans are available for all property types
including commercial, residential, multi-family, and even land loans. Each
lender or group of lenders determines the requirements for what types of loans
they will give as well as how much money they will lend. If the lender gives
loans on residential properties he/she/they are required to be licensed through
the National Mortgage Licensing System (NMLS). In order to sure that the lender
you are using meets all requirements, it is best to use a broker or investment
team that specializes in hard money lending.

Although hard money loans have significantly less
regulations than traditional mortgages, there are certain federal regulations
that apply to hard money lenders. For most property types, hard money lenders
do not require the same income verification or credit score guidelines that
traditional banks do. This is part of what makes them ideal bad credit home loans Texas residents
with bad credit can use, as they look at the value of the property from an
investment standpoint, not based on credit or income. However, it is important
to note that hard money loans are more risky for the lender and therefore come
with a higher interest rates. In addition, if you are taking out a hard money
loan on a residential property, you will be required to some proof of ability
to repay the debt. This means some type of proof of income though it is usually
less stringent than what a bank requires.

When you take out a hard money loan, the property that you
are investing in becomes the collateral. If you default on the loan, the lender
will seize the property to protect its investment. If you take out a hard money
loan, make sure that you will be able to pay the loan back in full at the end
of the term by either selling the property or other means. When you sell the
property you keep any money that is earned above the amount of the loan and any
accrued interest.

A
financial professional or mortgage broker can help you decide if a hard money
loan is a smart financial choice. It is a great way for Americans with bad credit
scores to start taking advantage of real estate investing. In addition, hard
money loans can benefit prime borrowers as well. If you already own a home you
may not qualify to purchase an investment property based on your debt to income
ratio. A hard money loan can be a great work around to get you into the real
estate market. Call a broker or your financial adviser to learn more today.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Texas Tel:     (512) 516-1177 

www.Level4Funding.com