Setabay Private Hard Money Lender

Sunday, January 13, 2019

Understanding Arizona Hard Money Loans

Not all loans are perfect for every borrower’s needs. Understanding what Arizona Hard Money Loans are and how they are best used can offer you some unexpected benefits.

Many consumers are completely unaware of what Arizona Hard Money Loans are and how they can be beneficial. The misconception is that these loans are in some way less than legal is completely false. These are simply loans which are offered and funded by private lenders and not traditional mortgage companies or banks. And these lenders are providing the money not so much based on the borrower’s credit score but more on the value of the property being purchased. This is because the property is going to be the collateral for the loan. Arizona Hard Money Loans are sometimes referred to as asset-based loans as well.

There are a few benefits to Arizona Hard Money Loans being based on the value of the property. The first benefit is that the borrower can have less than perfect credit and still easily get approved for the loan. Most lenders would prefer to see a credit score of about 550 or more but each lender is free to decide who they are willing to lend money to. Also, by eliminating all of the background documentation and inquiry into a person’s financial history, the approval process can move much more quickly than a traditional loan. In addition, hard money lenders are free to tailor the terms of the loan to meet the needs of the borrower rather than forcing all borrowers to live within the same terms as banks often do.

All of these benefits make hard money a faster and simpler process when time is critical such as for the purchase of a fix and flip property. Finding a great deal on a property is not always easy and when an investor does, it is like to become a bidding war if he or she cannot get funded quickly to close the deal. In these cases, a flipper can turn to a hard money lender and have the deal done in as little as a week.

A Price To Pay

All of these great benefits are not free. Any loan will cost you money in the form of interest and other fees, but hard money is going to cost you a little more in interest than a traditional loan. Because most hard money deals represent a higher risk, the lender will ask for a higher interest rate to protect his or her interest in the deal. In addition, there could be fees or other terms of the loan that works to protect the lender’s investment.

Due Diligence

Because hard money lenders are private lenders, they are free to create the terms of their choice for any loans that they fund. For this reason, it is critical that you read the entire loan document and understand all of the terms of the loan prior to signing it. Even though the lender is private and not a bank, the loan agreement is a legally binding document and you will be required to follow any agreement that you sign.

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.

Types of Loans To Flip Houses in Arizona

It is important to know that there are different types of loans available. And, some Loans To Flip Houses in Arizona offer more benefits than others.

There are dozens of television shows which have popularized the concept of buying a house, making some repairs and renovations and then quickly reselling the home. The process is known in the real estate industry as flipping. And this process is making a lot of money for a lot of people. But there is more to this business than just buying low and selling high. It is critical that investors understand all of the nuances of using Loans To Flip Houses in Arizona.

There are four common Loans To Flip Houses in Arizona for the average investor. And in this case, average means an investor who is going to need to secure financing and does not have a pile of cash under the mattress. The first method is what almost everyone uses to finance a home, the traditional lenders. These are the mortgage companies and banks that everyone is familiar with. The biggest issue when using a traditional lender is the time involved. Just as the name implies, flipping is a fast process which relies on speed and efficiency to make the process profitable. And anyone who has ever applied for a traditional mortgage knows that the process is anything but fast.

The second method is to use personal credit such as the equity in your own home through a refinance or a home equity line of credit. The personal refi has the same issue as the traditional loan in that the time required does not fit the fast process of a flip. The home equity line is a better fit because you have instant and constant access to the fund. But you are essentially placing your own home at risk by using a HELCO.

Arizona Hard Money Loans To Flip Houses in Arizona

Hard money is a loan that is funded from a private lender rather than a bank or mortgage company. These loans are fast and relatively easy to secure as compared to a traditional loan. This makes Arizona Hard Money Loans the best choice for most real estate flip deals. The drawback on hard money is that the cost is higher than a traditional loan. But when time is critical, hard money is the way to go. Hard money is an asset-based loan so the application process is not as time-consuming or stressful as a traditional credit-based loan approval.

Evaluate Your Options

Even though Arizona Hard Money Loans are more costly than traditional loans, the fast turnaround time is often worth paying for. You could find a property, make an offer, get hard money and complete the refi and flip before a mortgage company would even get you an answer on your application. And the fact that Arizona Hard Money Loans are short term is also a benefit as you are not financing out for a number of years and paying interest for the entire time. There is also the option to use the equity in your home or a line of credit but beware of risking your home on the flip of another property.

Tips for Getting Rental Property Loans in Arizona

Rental properties are a great way to grow your wealth. But it can be difficult to secure Rental Property Loans in Arizona.

Home values are climbing which is great for anyone who wants to get into owning rental properties to increase their wealth. Many people are not looking to rent because they can no longer afford to purchase. So the rental market is strong and getting even better. But the housing collapse did have an adverse impact on the fast loans that many investors where using to buy rental properties. Now the best way to secure Rental Property Loans in Arizona is to know a few tips that the pros use.

Getting any loan is always easier if you are prepared to make a sizable down payment. In the past, putting 20% down was a big deal for most investors. But now with the tighter lending restrictions and qualification, 25% down or more is your best bet. Not only does this help to keep your payment lower, but it also will get you a better rate in most cases. So cash on hand can save you a lot in the long run.

Another important factor in getting approved for Rental Property Loans in Arizona is having great credit. Being a strong borrower will always get you the best rates and some other benefits as well. You might find that the processing of your loan request is not only faster but the process is less stressful as your credit does a lot of the talking for you. Lenders want to know that they are working with a serious professional who has a strong financial history and professional history.

Work With A Little Guy

Big banks are not going to be as impressed with high credit scores as a smaller bank or lender. Big banks are looking for big deals, so a rental property is not going to really get them excited. So unless you are buying an entire complex, check out smaller lenders who are willing to work for your business. They will often be more flexible simply because that is what they have to do to get customers. Big lenders make their money from corporations and huge businesses while smaller lenders, tiny local banks and savings and loans survive by doing business with local companies and individuals.

Be Creative

If you are finding it challenging to secure Rental Property Loans in Arizona, then get creative with your financing. The easiest way to finance a new rental property is to ask for seller financing. This is not always an option, but if you can find the right seller, then the financing could be fast and easy. Also, look at other personal sources that you might have. Using a personal home equity line of credit or even a personal loan could be a great way to make a fast purchase. Then you have the option to take some time and shop for a great rate to refinance. Using these tips can help you to secure your first few loans to begin a career as a rental property owner.

Securing Your First Loans To Flip Houses in Arizona

Becoming a real estate investor by flipping houses is a great way to start a new career. But you will need to understand some of your options to get your first Loans To Flip Houses in Arizona.

Entering the real estate industry is a great way to grow your personal wealth, be your own boss and have the opportunity for almost unlimited income if you are willing to work hard enough. But what stops many people is the challenge of securing the first few Loans To Flip Houses in Arizona. The old saying that you need money to make money could not be more true than in the flipping business. Getting the first few projects completed at a profit is what allows you to continue to make more purchases and more profit.

One method used by many homeowners who are interested in flipping is called cash-out refinancing. This process basically allows homeowners to use the equity in their personal home to finance their first flip. You will be refinancing your current home for a new mortgage which is greater than the amount that you currently owe on the home. Then you have the excess cash to uses to make the down payment on your flip property as well as any repairs or renovations that you are going to make.

Cash-out refinance Loans To Flip Houses in Arizona will require that you have a minimum credit score of around 650 and that your debt to income ratio is below 45%. It is also recommended that you have 30% to 40% equity in your home. If you meet these qualifications then you are certain to be able to get a much better interest rate on your refinance than you would be paying if you were to use a credit card or some type of personal loan to finance your first flip.

Added Costs

Because these Loans To Flip Houses in Arizona are a mortgage refinance, you will be paying some additional fees that you would not be facing if you were to use a personal loan or credit card. In most cases, you will be required to pay closing costs of anywhere from 3% to 6%. In addition, you could end up with a higher interest rate on the refinance than you had on your original mortgage so that could cost you more over the life of the loan.

Compare Total Cost

In the end, you are looking for the most affordable financing that you can find to begin your flipping business. So most new flippers will explore all of their options and compare the total cost of each lender and type of loan. Options such as Arizona Hard Money Loans and home equity loans or a home equity line of credit might be a better option for you, but you will only know once you have completed an exhaustive search of all of your options and then compared the total cost of each option. Getting the lowest cost on your first few loans could be the difference between making no profit and leaving the business or making a solid profit on each flip and growing your business.

How to Evaluate if Commercial Hard Money Loans in Arizona are Right for You

You still have options if the banks won’t fund your business mortgage. If you’ve got a solid business plan, commercial Hard Money Loans in Arizona are a great way to get your project off the ground.

Big banks reject a lot of small-business owners because their projects tend to come with greater risk. They prefer to have sure bets, so they heavily weigh things like credit scores, years in business, and revenue. Worse yet, having your score checked repeatedly, regardless of whether you’re denied or decide not to take the offer you’re given, can hurt your chances of getting approved later, so it’s important to evaluate all your options before moving forward with any one choice. If the banks won’t play ball, there are three main alternatives to look into; credit unions, regional banks, and commercial Hard Money Loans in Arizona .

Credit unions can work if you’re just shy of qualifying with a big bank or you aren’t being offered good terms. You do have to qualify to join one before applying and the criteria will vary based on the institution. Many have higher approval rates and, because they’re non-profit organizations, you’ll likely see lower fees and interest rates. However, if you’ve got rotten credit, don’t live near a credit union, or don’t qualify to join one, you’ll likely need to explore other options.

Regional banks can be another alternative. According to Yardi Matrix Director of Research Paul Fiorilla, they’ve seen the greatest growth when it comes to commercial and multifamily mortgages, which suggests approval rates are slightly higher. “Generally, the smaller the bank, the larger the concentration of commercial mortgages,” he says. While this may be good news right now, he adds that “historically, small banks have played a major role in some of the markets biggest busts,” and expresses concerns that the density seen with smaller banks could spell out trouble in the near future; both for the banks and hopeful borrowers. Moreover, many tend to focus on niche businesses that they know and trust, so the banks in your area may not be big on your preferred property, and some are moving away from fixed-rate solutions to protect themselves from Federal Reserve interest rate hikes.

Private and Hard Money Provide Options and Relationships

Doors really start to open when you explore commercial Hard Money Loans in Arizona . It’s no longer a matter of having a perfect credit score or fitting into a specific niche, but rather having a good business plan and connecting with an experienced broker. Your broker will get to know you and your plans and will then find a private lender who likes to fund projects like yours. Because the approach differs, approvals increase and you’ll likely be offered better or more flexible terms.

There are fewer regulations with private lending, so there’s less red tape and you can get funded faster.

Part of the flexibility afforded by commercial Hard Money Loans in Arizona comes from the fact that they’re not subject to the same regulations conventional mortgages are. This also means the process is streamlined and you can be fully-funded in a matter of days, not a month or more like you’d probably experience with a credit union or regional bank. So, if speed, credit, and denials are getting in the way of funding your business mortgage, touch base with an experienced broker to find out what terms you’ll qualify for with a private lender.

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

Can You Really Get Funded with Hard Money Loans in Arizona in Days?

Whether you need funding before the year is up or are simply eager move on a deal before it vanishes, Hard Money Loans in Arizona can help. Unlike traditional mortgages which can take more than a month to get cash in hand, you can measure your HML timeline in days.

According to a recent report from Ellie Mae, closing on traditional mortgages is becoming an increasingly sluggish process, with the average refi now taking 43 days and purchase taking 46. This is the longest close time seen in more than a year, meaning those who need to move quickly are out of luck if going through traditional channels.

The same report notes that FICO scores stand in the way for many people trying to get financing. In all, 71% of those funded have scores that top 700, but the stats are a bit grimmer for those going the conventional route. Just 13% of financing was awarded to those with a 650-699 FICO score and less than 4.5% went to all groups sitting at 649 or below. Overall, the average score of those approved currently sits at 727, yet it’s important to note that the average person doesn’t have a score this high. Even though FICO scores are at an all-time high across America, CNBC says they’ve peaked at 704.

Time and credit scores are major barriers for those hoping to move on the purchase of a home quickly, but these numbers largely reflect the landscape for traditional homebuyers. Those working in real estate investing or who want to grab a great deal on a distressed property and restore it face additional challenges. When lenders are being picky about the traditional markets and raise the bar for criteria like FICO scores, those trying to get funded for mortgages under less-traditional circumstances are edged out even more. This is where Hard Money Loans in Arizona can help.

You Can Get Funded Quickly—Even with Rotten Credit

Regardless of whether you’re an average person who wants to purchase a distressed property with the hopes of turning it into a dream home or you’re a real estate investor, you may have trouble even getting the banks to talk to you at all. However, hard money loans work differently. Your FICO score is not a major deciding factor, but the value of the property you’re looking at is. In other words, simply choosing a home that’s a good deal, be it because you’ve negotiated a lower price or the seller is motivated to unload his junk home fast, will be enough to get your foot in the door.

If you can find a good deal, you can have cash in hand in a matter of days.

Conventional financing comes with a lot of red tape because it’s subject to different laws and guidelines than Hard Money Loans in Arizona are, so conventional options take longer to process… and that’s if you’re funded at all. If you’re organized and prepared, it’s not unheard of for alternative funding to come through in a matter of days, making it a great choice for those who need to move quickly or are even struggling due to an “average” or less-than-average FICO score.