Investing in a real estate property is a huge decision and one that should not be taken lightly. That said, it’s important to understand the current market conditions and how they may affect your decision to purchase a property.
Right now, interest rates are on the rise. This means that if you’re thinking about purchasing a property, you need to be prepared to pay more in interest. However, this doesn’t mean that you shouldn’t purchase a property. It just means that you need to be aware of the current market conditions and how they may affect your application and closing process.
If you’re thinking about purchasing a property, here are a few things you need to keep in mind:
When and Why the Federal Increased Interest Rates
In 2022, the Federal Reserve implemented its interest rate hikes four separate times, with more hikes likely within the next year. The reason for the rate hikes are to keep inflation in check as the economy continues to strengthen.
As for the hard money market, the rising interest rates have no direct impact because each individual lender sets the rates. In other words, your interest rate will be determined by the specific lender you’re working with and not by the Federal Reserve.
Traditional Financing Rates are Now on the Same Level as Rates of Hard Money Loans
According to Bankrate, the average 30-year fixed mortgage rate is now 5.99%, while a 15-year-old mortgage is at 5.18%. This marks the first time in years that traditional financing rates are on roughly the same level as rates of hard money loans.
Benefits of Hard Money Loans
Hard money loans differ from traditional financing in a number of ways that can be beneficial to you as a buyer. These include:
- Easy qualification process. The biggest factor impacting your loan inquiry is likely your credit score. But with hard money loans, no credit history is required and your score won’t impact whether or not you qualify for a loan.
- Less documentation required. Gone are the days of stacks and stacks of documents you need to provide to banks. With hard money, you’ll only need to provide a few documents.
- Due to the relaxed qualification process and minimal documentation, funding is exponentially quicker when using hard money. Instead of the application and closing process taking months, you can close on your property in as little as just a few days.
Get a Hard Money Loan for Your Property Investment
Predicting how the economy will be in the future is unrealistic. However, it pays to make wise financial moves to ensure stability should an economic crisis come. Investing in a property is one of the smartest things you can do.
But what if you don’t have enough money to buy a property outright? This is where hard money loans come in. Navigate to our purchase page to understand the path to ownership.