Hard Money Lenders Arkansas: Pros and Cons
Are you hoping to fund your next real estate project in Arkansas with a hard money loan? Whether you aim to flip a cozy bungalow in Little Rock or invest in a rental property in Fayetteville, hard money lenders in Arkansas offer the speed and flexibility you need. Hard money loans are an alternative to conventional loans, ideal for those with short project timelines, limited initial capital, or credit hiccups.
If you’re not a real estate investor but need to bridge the timing gap between buying and selling a home, we can explore alternatives to help you leverage your home’s equity.
This article will cover the essentials of hard money lending in Arkansas, helping you determine whether this financial tool is appropriate for your real estate investment or home-buying goals.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.
What is a hard money lender?
A hard money lender is a private individual or company that provides short-term loans secured by real estate. Unlike traditional lenders, who focus on the borrower’s creditworthiness and income, hard money lenders in Arkansas prioritize the value of the property being used as collateral.
These loan programs are popular among real estate investors, which includes house flippers or those purchasing rental properties and need quick access to funds and flexible terms. Hard money lenders determine loan amounts based on the after-repair value (ARV)—the estimated value of a property after all renovations and repairs are completed. They typically lend a percentage of the ARV to ensure the investment’s profitability and security.
Hard money loans generally have higher interest rates, ranging from 8% to 15% or more, and shorter repayment periods, usually between 6 to 24 months. Additional costs can include origination fees, closing costs, and points, which are a percentage of the loan amount paid upfront.
As with any secured loan, failure to repay a hard money loan can result in the lender seizing the asset, such as a house, to recover their investment.
How does a hard money loan work?
If you’re a real estate investor looking for a financing option that provides speed and flexibility, connecting with hard money lenders in Arkansas could be beneficial. Here’s a quick rundown of how hard money loans work:
