Setabay Private Hard Money Lender

Tuesday, March 19, 2019

The Benefits of Arizona Hard Money Loans

(Arizona Hard Money Loans are not for everyone. But they do offer many benefits to the right borrower.)

There can be a great deal to learn the first time that you are in search of a loan. And it is critical that you invest the time to doing some good research to ensure that you made a smart selection. If you rush into the first loan that is offered to you, there is a good chance that you could be losing a lot of money or getting yourself into a loan agreement that you don’t understand and cannot fulfill. Knowing the benefits of Arizona Hard Money Loans will help you to determine if this loan is a good match for your current needs.

Nothing in life is free, and that includes Arizona Hard Money Loans. Many potential borrowers look at the interest paid on a hard money loan as the greatest drawback, but the smart borrowers know that this is just the cost of such a convenient loan. Private lenders are not limited to the interest rate that they can charge so you will want to verify the interest rate with each lender that you speak to. But you need to understand that charging interest is how Texas Hard Money Lenders earn their living. Some rates will be a few points above the rate of a traditional lender, while other lenders who are willing to assume a great risk will charge in excess of 10%.

There is no way that a borrower will ever see the turnaround time of a hard money loan as anything but a fantastic benefit. Unlike banks that can take weeks or even months to process a loan request, most Texas Hard Money Lenders will process a request in just a few days. That short time period makes hard money a great choice for a very time sensitive loan.

A Loan With Fewer Requirements

When you apply for a loan from a bank, there is literally a huge pile of documents that you need to submit for review. They could request copies of your paycheck stubs, your tax returns, your bank statements and even documents regarding your business. But a hard money lender is going to be far more interested in the value of the property that will be used as the collateral for the loan. You will need to show proof of your income but there is no deep dive into your credit history and credit score to secure a hard money loan.

The Details are Critical

As with any loan, Arizona Hard Money Loans offer benefits and drawbacks. But if you have read the entire loan document, then you clearly know the total cost of the loan and all of the expectations that you must live up to during the repayment process of the loan. It is only when a borrower fails to read the terms and just signs the loan agreement that trouble begins. Investing some time in learning about hard money and then fully understanding all of the terms of your loan options will allow you to make the choice that best fits your current needs and is the most affordable.

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.

Understanding What Arizona Hard Money Lenders Want

The world of private lending is not as similar to traditional lending as many borrowers are discovering. Knowing what Arizona Hard Money Lenders are looking for in a borrower can be very helpful in securing a loan.

First, it is important to understand that although Arizona Hard Money Lenders are regulated in some ways, they are relatively free to conduct their business as they see fit. This means that each lender can determine his or her own criteria for approving a loan as well as the amount that will be offered to a potential borrower. But borrowers should also know that there are some general standards that cover the expectations of most Arizona Hard Money Lenders.

As you might already know, hard money is a form of asset-based lending, which means that the value of the property being used as collateral is far more important than the creditworthiness of the borrower. However, no lender is going to completely ignore the credit history of a borrower. Borrowers need to be honest with potential lenders and admit to past credit issues while demonstrating an ability to make the payments on the loan that is being requested. This can be showing a steady income stream such as regular employment or revenue from a business.

All lenders are also going to want to see a detailed business plan for the project. This plan should include the current condition of the property, a list of renovations and repairs to be made, the cost of all work to be done and a schedule to complete the work. This framework will demonstrate to the lender that the borrower understands the process and has a solid plan to get the project completed in order to pay off the hard money loan. A final piece of the plan that is critical to many lenders is a contingency plan. This is a description of how you will continue to make the payments if the property does not sell on your expected timeline. Borrowers really don’t want to take possession of the property in a default, they want to get paid and move on to another borrower.

The Property Needs

The property being purchased is the real key to getting a hard money loan. The lender will want to know the current value and condition of the property as well as an estimate for the property after the improvements are completed. In addition, many Arizona Hard Money Lenders will do a little research on how desirable the property is. This is in the event that the lender needs to foreclose on the property and sell it to recover his or her investment.

Have a Plan for Success

Lenders are looking for borrowers who have both a solid plan for getting a project completed on budget and on time as well as the experience to actually get the job done. In addition, it is important for the borrower to have the means to make the loan payments even beyond the expected completion date of the project. Knowing what lenders are looking for will allow you to prepare your loan request in a professional manner and have the greatest potential for success.

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

What Are Hard Money Lenders?

(If you are looking for alternative finance options, then you are certainly going to want to understand what hard money lenders are and what they have to offer. It could be the answer you are searching for.)

To understand who Texas Hard Money Lenders are, you first need to understand what hard money is. Hard money has nothing to do with how difficult it was to earn. Hard money is a type of short-term loan that is secured by the property that is being purchased. Also called asset-based lending, these loans offer many benefits as they do not rely so heavily on an individual’s credit score. And while many borrowers look at Arizona Hard Money Loans as a less than legitimate loan or something of a questionable nature or legality, these loans are perfectly legal.

Texas Hard Money Lenders are private individuals or private groups who offer these loans to borrowers. The lenders are in business to make money, and they choose to do it by offering loans based on the value of the collateral rather than the borrower's creditworthiness. And because they are offering a service that is less challenging to qualify for, these lenders know that they can charge a higher interest rate than a traditional bank or mortgage company.

When you speak of hard money and soft money, it can be a little bit confusing. But hard money is used for traditional purchases like a car which gives you many years to pay the loan back. Hard money is a short-term loan, meaning that you normally must pay the money back in about one year. So this would not be a favorable term for a car loan. But it does work very well for a fix and flip investment property purchase, or even a renovation to your personal home before refinancing your house and paying off the private loan.

The Most Common Uses For Hard Money

As we previously mentioned, the key to a hard money loan is the short term of the loan. So these loans are great for investments or projects which will be completed in a year or less. One of the more popular uses in the past few years is for house flipping. These loans fund quickly and allow investors to pay for the property and the renovation from one loan. Property development is another common use for Arizona Hard Money Loans as the projects normally fall within the one-year time frame. And personal loans that are needed to make home repairs or to consolidate bills could fall into the realm of a hard money loan.

Working With Hard Money Lenders

What is important to understand is that a hard money lender is just like any other business person. He or she is interested in loaning money to earn a profit on the interest. In addition, the lender is likely to work with the borrower on terms and conditions in order to close the deal. If you are new to hard money, it is best to simply be honest with the lender ask any questions that you might have about the process so that you are both comfortable with the agreement and the outcome of the loan.

What You Need to Know About Arizona Hard Money Loans

Knowing that Arizona Hard Money Loans are privately funded loans is a good start. But you need to also know the terms of these loans to use them successfully.

If you are researching Arizona Hard Money Loans, then you most likely know that these are short-term loans that are offered by private lenders. But that is only the beginning of the information that you need to know to fully evaluate these loans and determine if hard money is the best option to meet your financing needs. These terms of these loans are quite different than those of traditional loans as are some of the costs and fees associated with hard money.

The first factor to consider is how much money you can actually borrow on a specific property. In most cases, lenders will consider loaning between 70-80% of the value of the property. This loan to value number is important to the lender because it represents instant equity in the property and added security to the lender. If you, the borrower, default on the loan then the lender can take possession of the property knowing that it is worth at least the balance of your loan and in most cases more. On the upside is the fact that this money can often be in your hands in as little as a week or two when working with a hard money lender, rather than the 45 to 60 days that it takes a bank to fund a loan.

Knowing how much you can get and how quickly you can get it leaves one more big question. You should understand that hard money is going to cost you more than a traditional loan. The interest rate is going to start at about 7% for a strong deal and a borrower with good credit. For more risky deals and credit challenged borrowers, the rate can increase to as much as 15%. In addition, most lenders will charge anywhere from two points on a simple loan to ten points on a more challenging Arizona Hard Money Loans.

Qualifications and Documents

Although the criteria for hard money is not as stringent as a traditional loan, there is a certain amount of information that you will need to prepare for the lender. A few personal bank statements will be required as well as a credit score of 550 or better. The higher your score the better your loan terms and rates will be in most cases. You should also provide a copy of the purchase contract, a contractor bid with the scope of work, a list of your past projects and other basic information about the project that will show its value and the potential of the renovated property. You will also need to have the down payment available as well as any fees and upfront costs associated with the loan.

The Hard Money Alternative

Arizona Hard Money Loans are a good alternative resource for many borrowers who are credit challenged or might be making several concurrent purchased as real estate investment properties. But as with any other tool, the user must have a full understanding of the function and benefit of the tool. Be certain that you carefully read and understand all of the terms of any loan offers. This information will allow you to make a well-informed selection for the loan that best meets your needs.

Pros and Cons of Arizona Hard Money Loans

(Even though it is often an expensive loan, there are many benefits of Arizona Hard Money Loans. But there can be a few drawbacks as well.)

There are many reasons that a borrower will begin to expand his or her search beyond the realm of traditional lenders. And for many borrowers, Arizona Hard Money Loans are an option that works for their special needs or with the credit challenges that they are facing. But before you decide that hard money is the way for you to go on your next loan, you should be well aware of the benefits and drawbacks of these asset-based loans.

Because hard money lenders focus on the value of the property being used as collateral, and less on the borrower's personal credit, the time required to process a request for hard money is far shorter than a traditional bank loan. This speed is a definite benefit for borrowers who are hoping to invest in a bargain property that they have just discovered. In many cases, real estate investors will regularly work with a hard money lender and have a very strong relationship that provides greatly expedited funding on many loans. It is well worth the added cost of hard money when you know that you can have the money in just a few days rather than a few months.

Traditional lenders offer very limited terms to their borrowers. And because most banks are very large and have hundreds of thousands of customers, they are not willing to work with a borrower to customize the terms of his or her loan. But a private lender does not serve nearly as many loans so he or she must work with the borrowers to create mutually beneficial loan terms. This flexibility is a great benefit when you are looking for a very short term loan or need to structure the payments in a very specific manner.

Securing Arizona Hard Money Loans

Because the approval process is based on the value of the collateral property, borrowers with poor credit or no credit can often secure Arizona Hard Money Loans when traditional lenders reject their loan request. And even at a higher interest rate and with higher fees, hard money is a much better alternative than no loan. So consumers with bad credit are often eager to use these lenders.

Understanding the Drawbacks

Now that you know all of the benefits of hard money, it is important that you remember that the biggest drawback can be the cost of the loan. In some cases, the lender will charge up to 10% in interest and fees. And another negative aspect of these loans is that many borrowers will fail to read and understand the terms of the loan before signing the agreement. Even though you might think that all loan documents are alike, that is not the case. A private lender can include any clause that he or she chooses to add and you must follow the agreement if you have already signed the document. It can be very helpful to have a legal specialist review any loan agreement if you are not familiar with private loans.

Monday, March 18, 2019

The Basics of Arizona Hard Money Loans

(Understanding hard money loans and asset-based lending is important for all consumers. It might not work for everyone, but it is a good option to know about.)

As a consumer, you might only know about the more traditional types of lending such as a bank or mortgage company. But there are many other options available if you know where to look and understand how the loans work. Arizona Hard Money Loans are granted more on the merits or value of the collateral property than they are based on the borrower's personal credit score. For this reason, Arizona Hard Money Loans are also sometimes referred to as asset-based loans. This might sound like a very unorthodox type of loan, but once you understand the purpose of these loans and how to use them most efficiently, you will discover that hard money has its place in the world of finance.

It is also important to know that hard money is not something that you can go to a bank and request. Hard money is funded by a private lender, rather than a traditional lending institution. The lender could be an individual or even a small group of people who work together to provide hard money to borrowers. The other important bit of information is that these loans are not long-term like a traditional 15 year or 30-year mortgage. Hard money is normally borrowed for a year or two at the most, but the terms of a loan can be as short as a few months depending on the needs of the borrower.

As you might have guessed, coming from a private lender and with a much shorter loan term than a traditional mortgage, these loans carry a higher cost. In most cases, the interest is several points higher than a bank loan and the fees for the loan can be more as well. But there are many benefits to using a private lender to secure an asset-based loan.

Benefits of Hard Money

There are three main benefits to hard money that make it worth the higher cost of the loan. Because you are working with a private lender and not a bank, the loan is processed in a fraction of the time of a traditional loan. Speed is a huge benefit to many borrowers. In addition, private lenders can be far more flexible than a bank when it comes to the terms of the loan. This is also a great benefit to many borrowers. And finally, having the loan approval based on the value of the collateral and not your personal credit score means that Arizona Hard Money Loans are easier for many people to secure.

Understand What You Are Signing

The most important part of any loan process is that you have a clear understanding of what you are signing and what is expected of you. Because asset-based loans can be customized, you need to verify all of the terms with your lender and be sure that you understand the total cost of the loan before you sign the loan agreement. Even though the loan is not from a bank, the loan agreement is a legally binding document.