Borrowing money can be helpful to cover starting up a business, college expenses, investing in real estate, etc. However, you must first understand the different lending options to know which best suits your purpose.
Hard Money Bankers is a full-service and self-funded hard money lending company in D.C. They provide you with fast and flexible financing for commercial and residential investments.
Hard Money Bankers is currently lending in Washington D.C., Pennsylvania, Maryland, Delaware, Virginia, and New Jersey.
Below is everything you need to know about different lending options.
Different Lending Options Available To You
- Personal Loans
Most banks offer personal loans, which can be used to buy or invest in anything of your choice. However, this loan is difficult to get because it is unsecured. This means you don’t have to put up collateral in case of a payment default. Thus, you can only borrow a few hundred to thousand dollars to be refunded within two to five years.
- Small Business Loans
As the name implies, this loan is for small businesses wishing to start or expand. The small business owner would have to submit an official business plan subject to review.
The borrower’s personal assets serve as collateral, and the repayment period extends between five to twenty-five years.
- Home-Equity Loans
This loan allows you to borrow up to the difference between your home’s current fair market value and the amount still owed on the mortgage. It is majorly for homeowners and allows you to borrow against the equity you have built up.
- Credit Card Cash Advances
You might be eligible for a cash advance if you have a credit card, as some credit cards have this feature. However, this means of borrowing is quite expensive because the interest rate for repayment is usually high.
Factors Influencing Loan Options
- Interest Rate
Interest rates can either be fixed or adjustable. A fixed-rate presents lower risk as you know the amount you are bound to pay over the course of repayment. However, an adjustable rate allows you to pay lower when prices are low but higher during inflation.
The high-risk level can be detrimental as market fluctuations determine prices.
- Loan Type
Your loan Type can either be FHA, Conventional or Special Programs. Your loan type affects the option of how much you can borrow, the total cost of your loan, and the down payment required.
The Federal Housing Authority (FHA) loans accept lower down payments and are available to people with low credit scores. The Conventional loan costs less than the FHA loan but is more difficult to secure.
Lastly, special loans include Veteran Affairs (VA), the United States Department of Agriculture (USDA), and Local Housing Authority loans.
- Loan Term
The term of your loan influences your monthly principal and interest rate/payment. Your loan term can either be long-term or short-term. A longer loan term attracts a higher interest rate.
However, you can space out the payment with a lower monthly payment than a short-term loan. A short-term loan attracts a lower total cost than taking a long-term loan.