House flippers without enough capital to fully fund their flips are looking for loans to flip houses Philadelphia. Sometimes they think the bank is their only option, but there are also hard money lenders. If you are trying to decide where to get loans to flip houses Philadelphia, quickly answer the following nine questions and we’ll tell you if the kind of loan can be secured at a bank or from a hard money lender.
1. Would you prefer to qualify for this loan based on:
(a) a loan to value ratio based on your flip property
(b) your personal credit score?
2. Do you want:
(a) a short-term loan to cover three to twelve months while you flip the house?
(b) a longer term of 15 to 20 years?
3. Can you work with a lender that requires:
(a) a detailed rehabilitation plan for the property?
(b) the property to be in good shape and will not loan money for rehabilitation?
4. Including the application process, would you like to get your loans to flip houses Philadelphia in:
(a) five to ten days?
(b) three to twelve weeks?
5. Are you prepared to make:
(a) an investment of some of your own capital into the purchase and rehabilitation of this house?
(b) a down payment of 20% on the house and fully fund any renovation work you plan to do?
6. Do you want to provide:
(a) your scope of work for the flip project?
(b) proof that your salary will cover your monthly payments?
7. If we asked do you want to pay 8 to 15% interest or just 4% interest, we know which you’d pick, but this question is a little more complicated. Would you rather:
(a) pay a 10% interest rate on a six-month loan making monthly interest-only payments until maturity when you pay the principal in full?
(b) pay a 4% rate on a 15-year loan making monthly interest+principal payments and then paying a fee (probably) to pay off the loan in full after the flip is completed in six months?
8. Would you be more comfortable working with a lender:
(a) who is a real estate investor and understands house flipping?
(b) who has no idea of what you’re doing?
If you chose mostly option (a)
If you chose (a) a lot more than (b), what you’re looking for is a hard money loan. Most flippers prefer to deal with hard money lenders because they offer loan designed for house flipping with quick funding, short terms and smaller monthly payments until maturity.
If you chose mostly option (b)
The option (b) answers describe a conventional mortgage that you would get from a bank. It’s designed for the purchase of your primary residence, but can sometimes be obtained for other properties. The key advantage is a lower interest rate. But mortgages are designed for longer terms, require monthly principal+interest payments, and may have a prepayment penalty charge.
These eight questions should give you a pretty good idea of where you’ll want to get your loans to flip houses Philadelphia, but certainly it’s important to do your own research and make the decision that’s right for you.