Danbury is a city in Fairfield County, Connecticut, and it is the seventh-largest city in Connecticut. It has a population of just over 85,000 people, and it is known as “Hat City” due to being the center of the hat industry in America historically. Danbury was once ranked by USA Today as the second best place to live in America. Despite its high cost of living, USA Today said the quality of living justified the costs in the city, given the great leisure activities and the high amounts of marinas and nature parks.
According to Niche, Danbury is a suburb with terrific night life and diversity. It is a place where most residents own their homes, and there is a great food scene. It is home to many families and young professionals, as well as home to great schools. The median home value of Danbury is $299,600, and the median rent is $1,466, which are both above the national average.
Right now, Danbury is a seller’s market. Demand is rapidly outpacing supply in Danbury as the nation sees a housing bubble, which means homes are selling fast and for very high prices. Danbury is a place where home buyers and real estate investors can get into bidding wars for very competitive properties as a result.
To invest in real estate in Danbury, hard money loans might be the answer. Hard money loans have a huge advantage in seller’s markets in that they can be approved very quickly, unlike traditional financing. Traditional mortgage loans usually take a month at least to be approved due to stringent requirements and regulation, while hard money loans can be approved within a couple of days.
The reason hard money loans can be approved so quickly is because they’re not based on the financial standing of the applicant, like traditional financing. To be clear, credit score still matters: most hard money lenders require minimum credit scores of 600 to 620. However, hard money loans are based on the after repair value of the property. Most of them use the property as collateral, and if a borrower defaults on a hard money loan, the lender takes on the property, which contrasts with traditional financing, where there are lengthy foreclosure proceedings following a borrower defaulting on a mortgage.
Hard money loans have significant risks for both the borrower and lender as a result. They have higher interest rates, shorter repayment periods, and lower LTV ratios than traditional mortgage loans. Hard money loans have interest rates of about 8–15%, repayment periods of more or less a year. This is opposed to traditional financing, which has 15 to 30 year repayment periods on average and interest rates just above 4% as a national average. The lower LTV ratios of hard money loans mean they require larger proportions of down payments from the borrower.
It’s important to be very careful and selective when choosing a hard money lender. Not every hard money lender is trustworthy. Some can tack on extraneous fees like closing costs and origination fees, and others do not communicate well about the fees they require from borrowers. Many hard money lenders also do not lend to new investors due to requiring successful track records of real estate investments.
Hard Money Lenders IO has made a list of the best hard money lenders in Danbury. These are the best financing partners for your investment.