Setabay Private Hard Money Lender

Sunday, January 20, 2019

What are Arizona Bridge Loans and How Do They Work?

In certain types of real estate markets, Arizona Bridge Loans are popular and serve both investors and home owners. If you are currently in an existing home and want to purchase another home before your existing one sells, this type of loan offers an optimum short-term loan that can help you achieve this goal.

Understand that Arizona Bridge Loans are not without risk. These loans are not permanent loans. They are meant to be short term in nature and, as the name implies, “bridge” the gap between the existing home and the new home mortgage. They are secured by the existing residence. In reality, you are borrowing your down payment.

Set guidelines are not established by all lenders, such as minimum FICO score and debt to equity ratios. Funding of the loan is approached by underwriting as lenders determine if the loan “makes sense.” The key to the loan is that long term financing is obtained on the new home. The loan payment may be excluded by some lenders for qualifying purposes. Most borrowers have an existing loan on the current residence; so many lenders will add the two mortgage payments together. Most buyers are going to close on the new home before they sell their existing residence.

Higher debt to equity would be accepted by a lender if the mortgage for the new home is a conforming loan. If the new home is a jumbo mortgage, then the lender will restrict the buyer to a 50% debt to equity ratio. There are fees associated with Arizona Bridge Loans. Interest rates can fluctuate and vary depending on lender and location. Some of the fees that a borrower will need to pay are:

1. Administration fee

2. Appraisal

3. Escrow

4. Title Policy

5. Wiring Fee

6. Notary Fee

Based on the amount of the loan, there may be an origination fee. There may be points charge of 1% of the loan or more.

Risks and Rewards Associated with Arizona Bridge Loans

In a “move up” home, if you are tight on cash and your existing home has not sold, you can finance the down payment by taking out a home equity loan or a bridge loan. In a tight market, waiting until your home sells can result in the loss of your dream home that just hit the market. After all, buyers will prefer a full offer over one that contains a contingency. If you proceed in purchasing a home before the existing one sells, then be prepared to pay two mortgages. Bridge loan benefits include the following:

· You can buy without restrictions and immediately put your existing home on the market

· You may be given a few months grace period on a bridge loan before the first payment is due

· When you place the bid for the new home, you remove the contingency when making the offer for the new home

Bridge loan drawbacks include:

· Home line of credit costs less than Arizona Bridge Loans

· A stringent requirement that the buyer may not qualify for is that they can meet the financial requirement to pay two mortgages

At Setabay, we offer Arizona Bridge Loans as well as construction, fix and flip, and Arizona Airbnb Loans.

As with all loans, various lenders, particularly private and Arizona Hard Money Lenders, offer various rates and terms along with underwriting processes and qualifying demands. At Setabay, we have streamlined the process and can let you know the status of your application in as little as 24 hours. Call us for a no-obligation quote.

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.

The Basics for Getting an Arizona Airbnb Loan

An increasing number of investors are purchasing property that they then turn around and rent via Airbnb. Find an Arizona Airbnb Loan in order to get into this lucrative investment strategy.

By 2017, the leisure industry had expanded with 25% of leisure travelers booking at least one stay at an Airbnb property. Since 2016, stays at Airbnb properties increased 19% according to a research report from Morgan Stanley. Airbnb has over 4 million listings in 191 countries. Leisure travelers prefer to book a stay at an Airbnb property than a motel.

Entrepreneurs seeking additional income will seek to rent out a house, apartment, or some other space by listing their property on Airbnb. Estimates are that some 650,000 people list to rent their property out on Airbnb and revenues for Airbnb have topped $2.6 billion with a typical host realizing, on average, $924 a month. Some hosts are realizing enough revenue that they are able to quit their jobs. Any Airbnb host must realize that there are costs associated with hosting, some of these are the costs associated with acquiring the property you want to rent, increased taxes, paying a commission, local regulations, property insurance, and the obvious cleaning and keeping your property well stocked.

You will need capital to get started and involved with Airbnb property. The costs associated to become an Airbnb host can be varied. One of the most obvious is the property itself. If you rent your property on Airbnb for more than 14 days per year, then you will need to report the money earned. Your best bet is to talk to a tax professional before you begin to rent a property on Airbnb to realize how this will affect your personal tax situation.

Considerations Before Becoming an Airbnb Host

Take into account these considerations before becoming an Airbnb host:

· Calculate the three percent charge Airbnb places on any payment and how this fee is going to affect your profit margin.

· Calculate the supplies needed for your listing, such as sheets, towels, and other household items. Do not forget that you may have to purchase additional electronics and furniture in order to make your house “Airbnb worthy.”

· You will need to be the housekeeper for the property or hire a service to clean. This is an added expense that your will need to calculate into your profit margin.

· Lastly, you will need to research insurance. For American hosts, Airbnb provides insurance such as basic liability and property protection. This may not be sufficient to protect your property. Call your insurance agent to discuss the proper coverage for this type of situation.

You are now spending thousands of dollars before you ever book a guest. It’s best to look for Arizona Airbnb Loans with a private money lender before you spend more money than you originally anticipated.

There also are challenges for an Airbnb rental by local laws or city ordinances. Banks will not lend on properties listed on Airbnb since localities restrict the listing of your property. Banks are reluctant to lend to a business that is “illegal” due to local ordinances that prohibit the listing. Although obtaining Arizona Airbnb Loans can be challenging, you may be able to find great options to get your foot in the door. At Setabay, we work with hundreds of private investors, some of which specialize in Arizona Airbnb Loans. We may very well be able to find the right loan for your first Airbnb property.

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

Three Reasons to Use Hard Money Loans

Understanding the benefits of Arizona Hard Money Loan will help borrowers justify the cost of using hard money. There is a price to be paid for everything that offers this many benefits.

Arizona Hard Money Loan are certainly more expensive than traditional loans. And because they are more expensive, many borrowers question what could be a good reason to use hard money. And the simple answer is that there are several reasons that hard money is a great option for many borrowers. Arizona Hard Money Loans can eliminate many of the issues that borrowers face when working with a traditional lender.

Anyone who has worked with a bank or mortgage company to secure a loan will tell you that there is nothing fast or simple about the process. You are required to complete long forms and submit a huge pile of documents before the lending institution will even consider loaning you any money. But because the focus of a hard money loan is on the collateral and not the borrower’s credit rating, there is far less information and documentation required to apply for the loan. In addition, the application evaluation process is much faster. Lenders are not required to evaluate as much information and can decide on the approval much more quickly. And with the request approved, funding is normally completed in just a few days. All of this speed is definitely worth the higher cost of hard money loans.

Another complaint from many borrowers is that traditional lenders are not at all flexible. They follow a specific process and will write loans on their terms only. If you do not meet their criteria, or if you are looking for a slightly different set of terms, then they are not interested in working with you. But being private allows hard money lenders more freedom in their processes as well as the terms for the loans that they fund. This less than standardized underwriting process allows borrowers to negotiate terms with the lender and actually end up with a semi-custom loan. And as we all know, anything that is customized is worth paying more for.

Approval is Key

If you are unable to qualify for a traditional loan, then it is a simple decision to pay a little bit higher interest rate to secure hard money. Hard money lenders are even willing to work with borrowers who have a foreclosure on their credit history. So this is a great opportunity for borrowers to begin to rebuild their credit while also enjoying all of the other benefits of owning a property. The easier approval process and requirements are two of the benefits that most borrowers are happy to pay a little more for.

Added Benefits

When you have no other loan options, paying a higher interest rate and higher fees is a small price to pay to secure a loan. Borrowers who are in need of a fast loan process are also often willing to pay the higher rates associated with hard money to secure a great property. And borrowers who are seeking unique loan terms or who need to negotiate the loan terms are happy to pay a private lender for the ability to tailor a loan to fit their needs.

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

Three Benefits of Hard Money Loans

Arizona Hard Money Loans are a great financing tool when used correctly. Understanding the loans benefits can help you to begin a very successful real estate investment career.

Arizona Hard Money Loans offer many benefits to borrowers and real estate investors. That is why seasoned professionals use these loans on a regular basis to purchase commercial properties, rental properties and fix and flips. But the novice investor needs to be educated to avoid misuse of these types of loans which can result in a financial disaster. Understanding the benefits will also help new users understand the best ways to uses hard money loans.

The speed of hard money is one of its greatest benefits. Not only is the application process much less complex than that of a traditional loan, but the approval and funding stages are also more expedient. This allows real estate investors to make an offer on a great property and know that they can close quickly and secure the property before another buyer comes along and starts a bidding war. This fast turnaround is certainly good but it comes at a higher interest rate than traditional loans. So smart borrowers know that hard money is best suited for fast projects. The application and approval are fast, the project is short-term and the higher interest rate is paid for only a short time so the loan is still rather affordable.

Part of the reason for the faster processing of hard money is that the qualifications are different than a traditional loan. Hard money is also called asset-based because the loan is secured with collateral rather than the borrower's creditworthiness. This makes it much easier for the lender to evaluate the property and determine if he or she will fund the loan. This qualification system makes it much easier for a person with low credit to secure a loan as well.

Flexibility Is Important

Hard money is offered by private lenders which makes these loans great for anyone who is looking to finance a rather unusual project. Most banks are not willing to finance fix and flip projects due to the risk as well as the short term of the loan. Private lenders can also be more open to funding a loan on a property that is in very poor condition as they can evaluate the potential of the property when the renovations are completed. A traditional lender is not willing to take that chance on a loan.

Understand Hard Money’s Purpose

Understanding that Arizona Hard Money Loans are designed for short-term projects and projects that are not going to fit into traditional lenders standards is critical to using the loans correctly. The higher cost is not really as big a deterrent as some borrowers might believe. Paying a little bit more is always better than not getting funded at all and missing out on an opportunity. Borrowers simply need to read the loan agreement completely and understand all of the terms and conditions of the agreement before signing it.

Saturday, January 19, 2019

The Cost Of Hard Money Loans

Arizona Hard Money Loans do cost more than traditional loans. And it is important for borrowers to understand all of the fees and costs of the loans before choosing hard money.

Whenever you get a loan from a professional lender, which could a lending institution or a private lender, the lender is conducting a business in order to make money. So you know that you are going to pay something for the use of the money that you are borrowing. But what most borrowers do not take into consideration is that added benefits or services are going to cost more. In the case of hard money loans, the added cost also brings with it added value.

It is important that borrowers speak to each lender to determine the fees that he or she charges on hard money loans. These fees can include the basics such as interest and points which you will pay on any loan, but there can be a long list of other fees that lenders will apply. Some of the more common fees include the underwriting fee, application fee, processing fee, referral fee and more. If you feel that there are too many fees to be legitimate, then seek out another lender as each hard money lender is pretty much free to access fees as he or she chooses. But also keep in mind that a few fees such as a small application fee and a processing fee are used to cover the administrative chores involved in the loan process.

There can also be some penalty fees involved in your loan that you will want to understand before agreeing to the loan and signing the loan documents. A late payment fee is fairly self-explanatory. Some lenders will offer a slight grace period but others will charge a hefty fee if the payment is even a single day late. If you are getting to the end of your current loan and cannot make the final large payment, some lenders will extend the loan or do a renewal but there is a cost for that as well. And finally, the lender is counting on a certain amount of profit from the loan in the form of interest. If you pay the loan off early, then the lender loses some of that profit. Many lenders will create an early pay-off penalty that is just about equal to the interest that would be lost due to the early payoff.

The Benefits

Hard money does come at a cost, but there are many benefits including fewer criteria to qualify for the loan and lower credit score requirements. In addition, the loan terms are far more flexible than a traditional loan and the funding is much faster as well. Clearly, the cost offers some important benefits to be considered.

Know The Terms

Each borrower needs to decide if Arizona Hard Money Loans and the cost associated with these loans is worth it to make a deal. Some real estate deals are so time sensitive that hard money is the only option to close on a great property before a bidding war begins. Evaluate the costs and decide if hard money is going to land you a great profit or if the cost is too high for you.

The Best Uses of Hard Money Loans

Not all loans are meant to be used for every financial need. Understanding how to best use hard money loans can help borrowers to take full advantage of these loans.

Because hard money loans offer some very specific benefits and drawbacks, there are certain types of purchases which are best suited to hard money loans. Having a clear understanding of how hard money works and its benefits can help first-time borrowers use them to their greatest benefit to increase profits and to grow their personal wealth.

These private loans are generally made for only a short time which can range from just a few months to a few years. Being short-term these loans are obviously best when used for short-term projects rather than being used in the place of a traditional mortgage which would span several decades. Some examples of short-term deals include fix and flips, land loans, construction loans and to bridge a time when a person is experiencing credit challenges and could be facing a foreclosure. In addition, hard money loans are the perfect option for a buyer who needs to have a loan funded very quickly. Then once the purchase is completed, the borrower can seek a traditional loan to pay off the hard money lender.

There are several reasons that hard money is best only used for a short-term project. The first and most important reason is that the interest rate on these private loans often ranges from 10% to 15%. To put that amount into perspective, current traditional mortgage rates are ranging from about 4% to 6%. In addition to interest, hard money lenders will also charge borrowers points and other fees. Points equate to 1% of the loan amount per point. So paying 5 points on a $100,000 loan would be a cost of $5,000. Additional fees could include applications fees, processing fees, appraisal fees, and even funding fees in some cases.

Fast Is Good

There is no question that getting a loan application approved quickly is a huge benefit for most borrowers. This can ensure that you are able to purchase a great investment property or even your dream house. But you need to understand that you are going to pay a higher price for this fast loan service. So budget both your time and money carefully. Keeping a renovation project on time can be difficult but if it allows you to use hard money and remain in the time frame outlined in your loan terms, it is worth the extra effort and late nights to get the work completed.

Make a Good Choice

Understanding the terms of your loan and the total cost of the loan can help you to use hard money as efficiently as possible. Often times these short-term loans are only used as a bridge to allow for time to secure a traditional loan at a substantially lower interest rate and for a more appropriate length of time. But in other cases, these loans are perfect for a renovation or fix and flip project that is only expected to take a few months.