New Britain is another city in Hartford County, Connecticut, and is known as “hardware city” due to its manufacturing history of the town. It is located just nine miles southwest of Hartford. It also has a very robust Polish population, being referred to as “New Britski.”
Right now, New Britain is considered a suburb of Hartford, with a population just over 70,000. It gives residents an urban and suburban feel, and most people in New Britain rent their homes. It is home to many young professionals, and right now, the median home value in New Britain is $160,800, and the median rent is $1,025. It is one of the most diverse suburbs in Connecticut.
New Britain is also a seller’s market, so prices tend to be higher and homes are selling very fast. Real estate investors and buyers can get into bidding wars, and New Britain is also a market where demand is rapidly outpacing supply.
Hard money loans might be the answer for real estate investing in New Britain. They’re also known as short-term bridge loans or last resort loans, but hard money loans have a huge advantage in seller’s markets like New Britain: they can be approved very quickly, in a matter of days. This is a significant advantage when compared to traditional mortgage financing, which can take a month or more to be approved.
The reason hard money loans can be approved so quickly is because they’re based on the property. In particular, they’re based on the after-repair value of the property. This contrasts with traditional financing in that hard money loans are easier to approve, especially for borrowers with bad credit. Hard money loans are not based on the financial standing of the applicant and aspects like credit score. They use the property as collateral for the loan, which means if a borrower defaults on a hard money loan, the lender takes on the property. In a foreclosure, the bank has to undergo costly and lengthy judicial proceedings, so hard money loans can result in both profit and risk for the lender.
Because of this risk, hard money loans have more unforgiving terms than traditional mortgages. Hard money loans have higher interest rates, shorter repayment periods, and lower LTV ratios. They have interest rates of 8–15%, which are significantly higher than rates of traditional mortgage loans (which are usually just above 4%). They also have repayment periods of more or less a year, which contrasts with the 15 to 30 year repayment periods of traditional mortgage loans. Lastly, hard money loans require higher proportions of down payments due to their lower LTV ratios.
It’s important to be selective when choosing a hard money lender, since not every hard money lender is trustworthy. Some hard money lenders have reputations as loan sharks, particularly for new investors who can be particularly vulnerable to bad hard money lenders. Many hard money lenders don’t lend to new investors at all because they require successful histories of real estate investments. Others might just tack on extra fees that are not communicated well to the borrower until signing, like underwriting fees, origination fees, and closing costs.
At Hard Money Lenders IO, we have compiled a list of the best hard money lenders in New Britain so you don’t have to. These are the best financing partners for your real estate investment.