Setabay Private Hard Money Lender

Sunday, January 6, 2019

What Are Hard Money Loans?

Most consumers are aware of the process to secure a traditional loan. But only a very few know about Hard money loans in Arizona and how to use them.

Traditional lenders are the banks and mortgage companies that you see online and with brick and mortar locations all over the country. These lenders offer relatively competitive rates and terms as they are federally regulated. But they also require borrowers to fit into a fairly specific mold to qualify for a loan. So the question is, what are your options when you don’t fit into that perfect mold which includes a steady paycheck from an employer, a good credit score and a low debt to income ratio? The answer for many borrowers is to try out using hard money loans.

What most people don’t understand in the beginning is that Hard money loans in Arizona are just loans from private lenders rather than a bank or other lending institution. These loans are legal, so don’t think that you can skip out on the payments because the lender can sue you or take your collateral. And the lenders themselves are not street thugs, drug dealers or other unsavory characters who are looking for a way to appear legitimate while laundering illegal profits. Arizona Hard Money Lenders are just average people who are looking to use their money to earn interest and make a living.

The reason that Arzona Hard Money Lenders are appealing to many borrowers is that these lenders are not scouring the borrower's application and credit history to decide if they will be a suitable risk for the loan they are requesting. These loans are asset-based rather than credit based. That means that the borrower must offer collateral to secure the loan. In most cases, the collateral is the property that you are using the loan to purchase. But the only requirement in most cases is that the collateral is worth more than the balance of the loan.

Instant Equity

As you might have guessed, being asset-based, Hard money loans in Arizona are never going to be for the full purchase price of the property. That means that as a buyer, you must be able to make a down payment on the property which will provide you with instant equity and the lender with some security. Your equity is the lender's security because if at any point during the term of the loan, you fail to make the payments, the lender has the right to take the property from you. Even if you only owe a few more payments which total a few thousand dollars on a few hundred thousand dollar house, the lender can take the property and keep the total amount that he or she can sell it for.

Why Use Hard Money?

It might sound like hard money is only a good deal for the lender, but that is not the case. A hard money loan is a great way for someone who has bad credit or no credit to purchase a property without saving the total purchase price. In addition, hard money normally funds very quickly so this loan is great for someone who is looking to make a purchase quickly and can’t wait for a traditional lender to approve the loan. But as with any loan, the most important part is to read the document and understand what is expected of you prior to signing.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

4 WAYS TO SPOT A HARD MONEY LOAN SCAM

As in every financial industry, you will find scams. Many people don’t realize they have been scammed until it is too late. Read on to make sure you are working with a trustworthy, legitimate Arizona Hard Money Lender and not a scam artist.

It isn’t always easy to spot a loan scam, but if you pay attention you will see the signs. Scam artists’ intention is to take full advantage of their victims; taking everything they can from them and even selling their personal information. Protect yourself and your finances by being aware of the following red flags.

RED FLAGS TO BE AWARE OF

1. GUARANTEED APPROVAL—You’ve gotten a “You’re Approved” letter in the mail from a credit card or a car dealership—that’s different that what is being discussed in this article. When you get those pre-approval letters in the mail, that is usually a legitimate business trying to get you to attempt to get qualified. Even though Arizona Hard Money Lenders are much more flexible than conventional institutions they still will not guarantee your approval without reviewing your credit history and assessing the risk they may be taking. If a lender tells you that you are approved without going through the approval process—walk away. Legitimate establishments want to know their money will be paid back.

2. SUSPICIOUS WEBSITE—The first thing you should do, when searching for a hard money loan is research—google your city and Arizona Hard Money Lender. Most likely, the first search you will come across is their website. Take time looking through their site. Reputable lenders have the financial capabilities to have a nice website—do they give information about various loans? Does their email address match their domain? Are there examples of their investments? All in all—do they have a professional online presence?

3. THEY ASK FOR MONEY UPFRONT— This is the most obvious sign of a loan scam. I’m sure you, or someone you know, has received the call saying they are the IRS and if you don’t wire them X amount of money they will arrest you. As silly as it may seem—many people have fallen for that exact scam. In 2017, American’s were defrauded of $905 million. Typically, in this type of scam, the scam artist will explain that this upfront money is for an application fee, processing fee or deposit—without even speaking to you about how the loan process works. Now, this is not to say that an application fee, credit report or appraisal is not required. Many Arizona Hard Money Lenders require an application fee—the same as an application fee required to rent an apartment. However, if they begin by asking for hundreds of dollars before you have seen anything—run for the hills. In legitimate transactions most fees are rolled into the total of the loan.

4. PROMISING YOU AN UNSECURED LOAN— Arizona Hard Money Lenders can be flexible on credit scores because they use property as collateral in case of default. However, your property is what is securing the loan. If a lender tells you they will give you a loan with little or no collateral, which is an unsecured loan, they are up to something. No legitimate lender would take a risk of a borrower defaulting on a loan and having nothing left to recover the costs. Unsecured loans do not happen with Arizona Hard Money Lenders—nor, do they happen with any legitimate financial institution.

If something doesn’t feel right, it isn’t right. Can you think of one time your gut led you astray?

The bottom line is you will find scam artists anywhere money is involved. There are so many red flags when shady lenders are involved. If you have questions about hard money lending, please visit our website level4funding.com.

Saturday, January 5, 2019

ARIZONA HARD MONEY LOANS FOR INVESTORS

One of the most difficult tasks for a real estate investor is finding a trustworthy and reliable lender to finance their investment.

People new to the real estate industry parallel loans and banks—not knowing there are other options. Conventional lenders have a very rigid criteria that borrowers must meet to qualify. Add to the strict requirements, conventional lenders also have underwriters, that are so overworked that they slow down the process. And the cherry on top of it all—-even if you meet all their criteria, but have a less than perfect credit score, your chance of approval is slim. So, what does an investor do if the bank turns them down? They form an alliance with a dependable Arizona Hard Money Lender.

Arizona Hard Money Lenders help obtain the finance needed to acquire your investment. These investments are properties that will be sold or rented. There are many reasons investors choose to work with Arizona Hard Money Lenders over conventional lenders.

WHY CHOOSE ARIZONA HARD MONEY LOANS

The most important reason to choose a hard money loan is your chance for approval—you are much more likely to be approved for a hard money loan because they have dramatically less stringent criteria than traditional financing institutions. Because they are private lenders, they have their own rules and regulations they follow, so you are more likely to be approved due to this flexibility—even without good credit. Arizona Hard Money Lenders are far less concerned with your credit because the property will serve as the collateral in case of default on the loan.

Investing in real estate means you need to have money right when you find an opportunity. Unlike banks, that can take up to 90 days for financing—Arizona Hard Money Lenders move swiftly. Most investors can be approved right away and funds available within 2 weeks or less. Arizona Hard Money Lenders require much less paperwork and have far less hoops to jump through than conventional banking.

Investors are able to close many deals quickly and because they give you the capital you need you can move on to the next deal. The quick financing means you have more opportunity to close more deals which results in more money. Once you have found a lender you work well with you can expect the process to continue to be smoother each time.

For both newbie real estate investors and seasoned alike— Arizona hard money loans will benefit your profession.

With higher loan approvals, more lenient terms, flexibility and quick funding a hard money loan makes more sense than a conventional loan. Real estate investors lose money because traditional banking institutions take too much time to approve and release funds—by the time you are approved you have possibly lost the deal.

WHY EVERYONE IS GETTING AIZOAN FIX AND FLIP LOANS

According to ATTOM Data Solutions, who are the “curator of the nation’s premiere property database,” it shows that 207,088 single family homes and condos were flipped in the US in 2017. Flipping houses is at its highest level since 2006—and from the looks of it, the trend will continue to grow.

There is a lot of hype out there connected to flipping houses. Part of the excitement comes from house flipping television shows that glamorize the work. It can be a lucrative profession—even if it’s only a part-time job.

The majority of investors who enter into the fix and flip business need help with financing. That’s not to say that after a few successful flips they will need as much help— and may not need loans at all. However, starting out in any business, everyone needs a little help. Once a few deals are closed, the money starts rolling in and there is more financial security.

THE DOWN LOW ON HARD MONEY FIX AND FLIP LOANS

What is the reason hard money loans have become so popular with Arizona fix and flip loans? Why are investors choosing a hard money loan over a conventional bank loan?

To start, Arizona hard money loans are funded by Arizona private money lenders—or Arizona Hard Money Lenders, as they are better known. Because these loans are funded by private investors there is more flexibility than traditional banks. Conventional lenders are funded completely by banks and credit unions. The banking industry has not come around to being comfortable lending on a house that needs repairs and will be turned around within a few months. This is where Arizona Hard Money Lenders are comfortable. They lend knowing the risk is there, but also knowing risky deals can give the greatest paybacks. Because of this risk, hard money loans come with higher interest rates—usually ranging from 7%-13%. But these rates are offset by the short holding process.

House flipping is very competitive and investors must act fast when they find the right property. Arizona Hard Money Lenders can typically fund investors in less than 2 weeks. The conventional loan process is very slow and can take up to 2 months to receive your funds. House flippers are always going to be in competition with all cash buyers. When you find a property you must be prepared to act quickly or lose a potentially great deal—that equals losing revenue.

If you don’t have great credit—that doesn’t exclude you from dabbling in the house flipping craze. Arizona Hard Money Lenders make it possible for borrowers with damaged credit to benefit from house flipping. Conventional lenders require a spotless credit report. Arizona Hard Money Lenders allow some damage on your credit report because they are using the property as collateral.

Hard money loans are short-term loans. It is possible to get 100% financing of your purchase price as long as you have the assets to back the loan.

These loans are not necessarily the best option for a long-term investment, as they are meant for a quick turn around such as a fix and flip. Usually hard money loan terms are from 6 months to a year, but because of the flexibility Arizona Hard Money Lenders have, these loans can be extended up to five years.

Qualifying For Hard Money Loans in Colorado

Not everyone can qualify for a traditional loan. But Hard money loans in Colorado have completely different requirements which can help many borrowers.

There are many reasons that a potential home buyer does not have great credit. It could be the result of poor financial choices in the past, the loss of an income or even just a younger person who has not established his or her credit sufficiently. But the result is always going to be the same rejection from banks and traditional lenders. Which is why many people are turning to Hard money loans in Colorado when they are unable to borrow from traditional lenders.

Traditional mortgages normally require a credit score of 620 or better and a score on the lower end is not going to be garnering a very competitive interest rate. In addition, late payments and bankruptcies are likely to eliminate your chance for a loan. But Hard money loans in Colorado are much easier to qualify for because they are asset-based loans. This means that you can have a lower credit score and even have a less than traditional income stream such as self-employed or a freelancer. What the lender is going to carefully consider is the value of the property, or asset, that you are going to use as collateral on the loan. Not only will the collateral need to be easy to liquidate, such as a property to sell, but it must also be more valuable than the amount of the loan that you are requesting.

In asset-based lending, the lender has the right to take the collateral and sell it to recover his or her investment if you default on the loan. The term default can mean missing a single payment or falling a few payments behind. That definition is up to the discretion of the lender and is something that you should be sure to clarify before signing the loan documents.

The Down Payment

To be certain that the collateral is always worth more than the loan balance, Hard money loans in Colorado are only offered for a percentage of the value of the property being purchased. This means that in addition to securing the loan, you will need to have cash on hand for the down payment. This provides some security for the lender and is also good for you as you have instant equity in your new home.

Understand The Loan Terms

Because hard money is offered by private lenders, the terms of the loan are very flexible. This can be great if you are requesting terms that are helpful to your ability to make payments, such as no payment for 90 days. But it can also create complications if you do not read the entire loan document and understand exactly what is expected of you as the borrower. In most cases, loan documents are very complex and it is in your best interest to have the loan paperwork reviewed by a legal professional to be certain that you are not getting yourself into a loan that has unreasonable terms. Understanding the terms of your loan and your responsibilities is critical to making a wise financial choice.

TO AVOID MISTAKES WITH A ARIZONA HARD MONEY LOAN

There are a plethora of benefits, for an investor, from a Arizona hard money loan. However, if you find yourself making mistakes during the submission process you can miss out on great properties by delaying your funds.

The most popular feature of hard money loans is the swift funding—you can get your money right away. Real estate investors use hard money loans to be competitive in the market. Unfortunately, many borrowers make common mistakes and lose great opportunities. It is imperative that you are aware of these mistakes to prevent a disaster from happening to you.

COMMON MISTAKES

First and foremost make sure you are working with a reputable lender. Many mistakes can be avoided by working with an honest lender with a good reputation. Unfortunately, there are a lot of scam artists out there. Choosing the wrong lender can spell ultimate disaster for you. Make sure you research your lender. How long have they been in business? How many deals have they done in the last year? Are there good reviews for them on sites like Yelp? What are the payment plans that are available? Can they send you a proof of funds letter?

Once you find a lender you are comfortable with make sure you know how much to borrow. Hard money loans work differently than conventional loans from banks. With a bank loan you make a payment each month that counts towards both the money you owe and the accrued interest. With an Arizona hard money loan your monthly payments are interest only and the balloon payment is due at the end of the loan. So, make sure you don’t borrow more than you need because that money will be tacking on interest, as well. At the same time, you want to make sure you borrow enough. Not borrowing enough can slow down your project. Get estimates from your contractors and discuss loan amounts with your lender.

Make sure, once your contract is drawn, that you read the fine print. This is a financial document and needs to be taken with the utmost seriousness. You don’t want to be held accountable for things you weren’t aware of. For example, some lenders charge an outrageous late fee for the balloon payment—others charge a prepayment penalty. Make sure you understand everything before signing on the dotted line. A reputable lender will review the document with you and answer all questions you have. Be wary of lenders that rush you through the paperwork—that usually means they are hiding something in the fine print.

An in-depth research of lenders will only benefit your financial life. Finding an honest, reputable lender—that you can continue to work with—will not only make your project run smoothly, it will benefit you in future endeavors.

Unfortunately, there are some unethical lenders out there in the financial industry. Choosing the wrong lender can not only hurt your career, but leave you in a financial disaster. The right lender is the most important part of the real estate investing puzzle.