Severn is a suburb in Maryland in Anne Arundel County, and it is a rapidly growing city. It is close to major cities in the DMV area, including Baltimore and Washington D.C. Severn is a very racially diverse city that has homes selling very quickly. According to Rocket Homes, in January 2022, Severn had an average listing period of 37 days, which means homes close very quickly.
Severn has great schools and is also right off the Baltimore-Washington Parkway and next to Glen Burnie, Hanover, and Odenton. Being within commuting distance to both Baltimore and D.C. makes Severn a desirable suburb within the DMV area.
Hard money loans are mostly used for fix and flips, long-term rentals, and repairs for construction projects. They are based on the projected value of a property after repairs. Hard money loans are not based on the credit history of the borrower, although most hard money lenders require a minimum credit score of 600 to 620.
Hard money lenders use the property as collateral. If a borrower defaults on a hard money loan, the lender takes on the property, which means hard money lenders have to determine whether the property can pay off the hard money loan in case the borrower defaults.
The biggest advantage of hard money loans, especially in a market where homes are only on the market for an average of 37 days, is fast speed of approval for loans. In real estate investing, particularly in competitive markets, time is often money. Traditional mortgage loans from the bank often take at least a month to be approved given pre-approval requirements and other logistics hard money loans are not subject to.
However, a risk of hard money loans is they have higher interest rates. Often, hard money loans can have interest rates of 8–15%. Hard money loans can also have short repayment periods of a year to three years, and low LTV ratios compared to traditional loans. This means borrowers have to pay off the expensive loans faster than traditional 15 to 30-year mortgages, and they have to put down a greater proportion of the house as a down payment than traditional loans.
It’s important to not trust any hard money lender. Many hard money lenders might seek to take advantage of new investors with origination fees and other extraneous fees. As a new investor, it can be difficult to be paired with a good hard money lender because many require a successful track record of successful investments.
We at Hard Money Lenders IO have compiled a private lenders’ directory of the best hard money lenders in Severn to secure your ideal property. With a loan that can be approved very quickly, you can compete as a real estate investor in the Severn market.