When Craigslist ads insist on hard money loans, Texas buyers are often left confused. In theory, the seller shouldn’t care how you fund the home, but there’s a good chance he knows something you don’t, and that you won’t qualify for a traditional mortgage.

Craigslist is great for a lot of reasons, and one of them is its vast real estate offerings. Whether you want to buy or rent, hope to find a massive estate or a cozy abode, there’s a good chance it’ll appear there at some point. However, some of the properties that seem to be offering the best deals insist that buyers obtain hard money loans; Texas newbie buyers are bewildered by it. Why does the seller care where you get the money to buy the property? The short answer is that he’s probably familiar with qualifications for traditional mortgages.

The FHA has certain guidelines regarding qualifications for mortgages, and most lenders adhere to them. Generally, the standards are set to ensure the house is livable, but they can be pretty extreme. At one point, homes had to be completely floored in order to qualify for a loan. A person would be disqualified if they tried to purchase a house that was missing something minor, like carpeting. Nowadays, the rules are a little looser, and mostly mandate that major systems within the home are functioning. This includes things like electrical, plumbing, and HVAC systems. It also extends into roofing, and holes in the walls.

More than likely, that home with the amazing price is lacking in at least one of these departments, and the seller knows it won’t qualify for a traditional mortgage just yet. This doesn’t mean it’s not a great deal. In fact, it may be fantastic chance for a new homeowner with handyman skills to get his hands on a bigger home than he otherwise could, but he’ll have to fund the project without a traditional mortgage.

Unlike traditional loans, hard money loans Texas buyers use are not subject to the same FHA rules. So, even if the electrical system needs TLC or the roof needs to be redone, you can still qualify for funding. People experienced in real estate or finance know this, and so they’ll warn you right away in their ad that you’ll need a non-traditional mortgage.

Another huge difference between hard money loan Texas financers offer and those from a traditional bank, is that qualifying for a loan is generally based on the property’s value, and not the borrower’s credit. This allows anyone, even people with terrible credit or bankruptcies, to purchase a fixer-upper and have their very own home. It’s worth noting that this type of financing is generally only used as a short-term solution, and most people who intend to live in the home later transfer to a traditional mortgage once the work on the home is complete. For this reason, it’s also important to know exact details about how much work the house needs, and to be sure that you can complete the work within a reasonable amount of time, while staying on budget. With these things in place, that home with the obscure seller demand just might be one of the best deals you’ll find.

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 38 years. They have 2 beautiful daughters 4 amazing grandchildren. Dennis has been an Arizona resident for the past 32 years.