Springfield is the county seat of Clark County, Ohio, and outside two major cities in Ohio: Dayton and Columbus. According to Niche, Springfield is a suburb that has a lot of green space and parks. It has median home values and median rents well below the national average. More people rent their homes than own them in Springfield. It has nicknames as the Champion City, but it’s also known for smelling like roses and being the City of Roses. It’s also known as the “City at the End of the Road.” It is a home to an Air Force base as well as many other businesses that attract residents.
Right now, Springfield is a seller’s market. Demand for homes rapidly outpaces supply in Springfield, and homes are selling for greater than asking price and very quickly. This means Springfield is a very competitive real estate market where it’s important to get offers in before other buyers.
Hard money loans might be the answer to real estate investing in Springfield. They are also known as last resort loans, and the biggest advantage of a hard money loan is its fast speed of approval. A hard money loan can be approved within a couple days, as opposed to a traditional mortgage loan which can take at least a month to be approved, which helps a real investor be competitive in Springfield.
The reason hard money loans can be approved so much quicker than mortgage loans is that they’re based on the asset of the property as collateral. The terms and rates of hard money loans are based on the after repair value of the property in particular, while a traditional mortgage loan is based on the credit score and financial standing of the applicant.
While most hard money lenders still have minimum credit score requirements of 600 to 620, hard money lenders take on the property in case the borrower defaults on the hard money loan. This is a much quicker and more convenient process for the lender because traditional lenders have to go through lengthy and costly foreclosure proceedings. The hard money lender has to hope the property can pay off a hard money loan.
This means both the lender and the borrower incur significant risk when hard money loans are taken out. For the borrower, these risks include interest rates of 8–15%, which are much higher than the average mortgage which has an interest rate of approximately 4%. It also means they have shorter repayment periods and lower LTV ratios. Usually, hard money loans have to be repaid within a year, and they require larger buy-in in terms of down payment from the borrower.
It’s important to be careful with hard money lenders. Not every hard money lender is trustworthy. Some tack on extra fees like origination fees or closing costs, and others might not be completely transparent with their lenders.
That’s why it’s important to be especially cautious with hard money lenders. Some recommend leaving hard money loans to the professionals, but new investors are capable of getting hard money loans too. However, most hard money lenders require a real estate investing history and tend not to touch new investors.
At Hard Money Lenders IO, we have you covered. We have compiled a list of the best hard money lenders in Springfield, Ohio, so you don’t have to.