Setabay Private Hard Money Lender

Thursday, March 21, 2019

Questions For Hard Money Lenders

(When you are comparing hard money lenders, you will want to ask all of the following important questions. This will help you to make the best selection to meet your needs.)

Hard money is a loan that is provided by a private lender which means that there are no real standards or rates that the lender needs to follow. That is not to say that Texas Hard Money Lenders are not regulated or forced to follow some guidelines, but most do not pertain to the rates and fee structures that they use. So all borrowers should have a list of questions for each potential hard money lender that they speak to. And the list should include all of the following questions.

The cost of the loan is a very big concern as that will have a hand in determining your profit, or loss, at the end of the project. Be certain to as what the interest rate and point for the loan will be. The rates can vary from 10 to 15% for interest and up to about 4% to cover points. Also, ask about any upfront fees to know the total cost of the loan. And the final fee that you should not is the early payment penalty that you would incur if you pay the loan off early.

The next major concern is about the other term of the loan. This can include things like the payment schedule, and the length of the loan itself. You should also ask if you have the option to extend the term of the loan or refinance it if you have not completed your project when the loan comes due.

Down Payments

The next question can vary a great deal because you are working with a private lender and each one has his or her own preference. But you need to know how large a down payment the lender requires. This is a way for the lender to add to his or her security because you have some of your own money tied up in the deal. The more risky the deal looks on paper, the higher the down payment is likely to be. Texas Hard Money Lenders like to know that the borrower has some skin in the game to remain focused and motivated to complete the project and repay the loan.

The Details

Your last questions for Texas Hard Money Lenders will revolve around the final details of the deal. You will want to know how long it would take each lender to be ready to close the deal and also how long until you will have the funding for the loan. In some cases, it is worth paying a little bit more in fees and interest to work with a lender who can close more quickly and have the money in your hands faster. The purpose of asking all of the same questions of all lenders is to have a fair way to compare each offer and to be able to determine which lender will best meet your needs on loan terms as well as the total cost of the loan.

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.

Critical Information for Newbies Seeking Arizona Rental Property Loans

Not all types of loans are the same and that can make seeking Arizona Rental Property Loans a bit scary for new investors. But these few bits of information can be a great help in the learning curve.

Acquiring a first rental property is both exciting and in some ways very trying. The excitement comes from knowing that this first rental property could be the start of a very lucrative real estate investing career. But the trying part begins when the new investor begins to realize that Arizona Rental Property Loans are not the same as a traditional home mortgage.

The first hurdle that most borrowers face is the fact that lenders are much stricter on a loan for an investment property, and they also require a larger down payment. All of this is because Arizona Rental Property Loans and all investment property purchases represent more risk than a mortgage for an owner-occupied property. The biggest reason there is more risk is that a borrower will default on an investment loan long before he or she will default on the loan for the place that he or she is living.

This higher risk means that lenders are going to look a little deeper on loan applications, and they are also going to want to get paid more to lend to the higher risk borrower. The biggest difference that borrowers are going to notice is in the interest rate. If an owner-occupied property loan is charging 4% then expect to pay 7% or even 8% for Arizona Rental Property Loans. In addition, lenders tend to charge a more in points and other fees to process an investment property loan. This can mean an extra point, or it could be additional fees for application processing, appraisal fees or even funding fees.

Your Credit Is a Huge Factor

As with all property loans and mortgages, your credit score is important. In the world of investment property loans, a credit score of 740 or lower is the point when lenders begin to charge higher interest rates. A score of 741 or up will likely get you the best rates that the lender offers. If you are very interested in getting the best interest rate possible, but your score is just a tad under the magic number of 740, then there is often the option to buy down your interest rate. You can request a quote with the best interest rate and the buy-down fees, as well as the rate that you qualify for and do the math to decide which offer works best for you.

More Magic Numbers

Even though you are just beginning the process of your first rental property purchase, it is important to know that most mortgage companies will not even consider a borrower who is already carrying four property mortgages. There are a few options to acquire more mortgages, but you need to have a very large cash reserve, a down payment of 25% and have a credit score of over 720. Knowing these pieces of information will help you to understand the expectations that you will need to meet for your rental property mortgage, as well as what to expect as you grow your real estate investment portfolio.

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 Residential Hard Money Lenders in Arizona?

Understanding what Residential Hard Money Lenders in Arizona are and what they offer can be a great benefit when you are entering the real estate investment business. They might not be perfect for every deal but they do offer some unique benefits.

Residential hard money in the real estate financing world is basically a loan for a residential investment property that does not come from a traditional lender such as a bank. These loans can also be called private loans, bridge loans or asset-based loans. Residential Hard Money Lenders in Arizona are the private groups or individuals who are providing these loans to borrowers.

There are some very clear differences in the services offered by traditional lenders and Residential Hard Money Lenders in Arizona. The first of which is the criteria used to determine if the loan request will be approved. Banks use a very long process that examines the potential borrower's personal credit history, credit score, tax returns, and current overall financial health. Arizona Hard Money Lenders are really more interested in the value of the property being purchases rather than all of the details of the borrower's personal finances.

This difference in the approval process leads to two more very significant benefits to using Arizona Hard Money Lenders. First, the process is much less complex and difficult for the borrower to manage. Very few documents are requested, and most of it is regarding the property and not personal assets or financials. Second, the loan application process, as well as the approval process, requires just a fraction of the time that a traditional lender needs to process a loan request. In many cases, a hard money lender can have an approval for you in less than a week, and then the money in your hands in just a few more days.

Who You Work With

In most cases, Residential Hard Money Lenders in Arizona are individuals or partners who are in business to make money lending money to real estate investors. This is another great benefit for borrowers as you are working hand in hand with the person who will be lending you the money that you need. This allows you to work with the lender to create loan terms that meet all of your needs, while still providing a realistic return on investment for the lender. Unlike many peoples common misconception, hard money lending is a very legitimate business that works within the letter of the law. You will not be working with shylocks, loan sharks, or other shady lenders, who might not be working in a legal business.

Just a Different Option

There are many different types of lenders other than the standard banks and mortgage companies that most borrowers use for a home mortgage. In some cases, these more creative and non-traditional lenders can better meet the needs of real estate investors or consumers who are unable to qualify for a traditional loan. What is important is that you completely understand the terms of the loan that you are getting and the total cost of the loan so that you can fairly compare and contrast all of your options.

Eight Options for Arizona fix and flip loans

(The fix and flip market has become very popular with novice real estate investors as well as seasoned professionals. But the big question for everyone is where to look for Arizona fix and flip loans.)

As new real estate investors are searching for ways to turn a profit and grow their business, the fix and flip segment of the industry has become a favored investment option. But these new investors are often faced with many challenges as they look for Arizona fix and flip loans. Knowing the best resources for Arizona fix and flip loans can be a huge help in launching your successful career in real estate investing.

Working within your close circle of family and friends is often a great way to secure funding for your first flip purchase. These loans are normally less challenging and stressful but should still be taken very seriously as a debt that must be repaid in a timely fashion. A finance partner is also a good choice. This is much like a silent partner, who will provide the money while you invest the knowledge and labor on the job. Or if you own your home or have substantial equity in your home, a home equity line of credit is a great way to put your equity to work for you in your new business venture. But be aware that you are putting your own home at risk if the project fails.

Another resource that you could have from a previous job is your 401k retirement savings plan. Many of these plans are designed to allow you to loan yourself money for certain investments or expenses. Check with your plan administrator if you are not sure how your plan is structured. The biggest benefit here is that you will be paying the interest on the loan to your own retirement plan.

More Traditional Arizona fix and flip loans

A personal loan is another option if you have good credit and enough income to justify the added payment. The interest rate could be higher than some other types of loans but higher interest is better than no loan. In some cases, you might also get very fortunate and find a seller who is willing to offer you seller financing. This is a great option for both of you as you are likely to be able to pay the loan off in less than a year when the flip is completed and sold.

A Hard Money Option

Texas Hard Money Loans are also known as asset-based loans because they are secured by the property that you are purchasing. You make a large down payment of up to 30%, and then the property is used as the collateral for your loan. If you default on the loan, then the hard money lender takes possession of the property as payment for the loan. These loans are normally short-term which works perfectly for a fix and flip project and allows new investors to have a great resource for loans as they begin their new career.

Reasons to Use Residential Hard Money Lenders in Arizona

Not all borrowing needs can be met by traditional lenders. For that reason, some borrowers will greatly benefit from understanding the best reasons to use Residential Hard Money Lenders in Arizona.

If you are facing a challenging financial situation, then you most likely already know that banks and other traditional lenders are often not willing to lend money to the borrowers who need it the most, or at the time that they need it the most. When this occurs, it is important for borrowers to understand the advantages of Residential Hard Money Lenders in Arizona and when it is appropriate to borrow from them.

There are many situations in life that all can result in a borrower having bad credit. In some cases, the borrower made some bad choices and is paying the price for poor choices. This could be getting too far in debt with credit cards and being forced to declare bankruptcy or spending more on a home than the borrower could really afford. But there are other cases where the borrower made no mistakes, he or she just got caught up in an unfortunate situation. This could be the loss of a job or getting laid off, a death in the family or even a serious illness that resulted in lost wages and a mountain of medical bills. But when you have issues with your credit, Residential Hard Money Lenders in Arizona might be your only option to get financing to purchase a home or an investment property.

Time is another huge benefit of hard money lending. If you are an investor and you find a great deal on a property, you don’t have time to wait 60 days for a bank to approve your loan. Or if you are facing a bidding war and the seller is looking for a fast-closing rather than getting top dollar, hard money will get you money in hand very quickly. In all of these cases, it is well worth the slightly higher cost of hard money to secure the purchase that will turn a great profit.

Avoiding Foreclosure

If you have fallen on hard times and are behind on mortgage payments, foreclosure is not far away. But you can avoid losing the property and crushing your credit by securing hard money to pay off your traditional mortgage. It is true that you will pay more interest to Residential Hard Money Lenders in Arizona, but that is a far better choice that the loss of the property, the equity that you have created and your personal credit. And once you have paid off the traditional loan and are back on your feet, you have the option to refinance the property with a traditional loan at a lower interest rate and pay off the hard money lender.

Unique Circumstances Require Unique Solutions

Hard money is a non-traditional resource, but it is one that works for many people who are in difficult situations. If you are faced with financial needs and cannot get the money that you need from a bank or mortgage company, then Arizona Hard Money Loans could be a very viable option for solving your issues.

The Best Options for Fix and Flip Loans

(Home flips are a very popular way to get into the real estate investment business. But the first challenge for most flippers is learning about Arizona fix and flip loans.)

There are a multitude of television shows that depict fix and flip projects as fun and simple. But the truth is that it is a very serious business that requires a good knowledge base of finance to be sure to get the best loan to meet your needs. Understanding your options for the best Arizona fix and flip loans is the first step in a successful flip.

Hard money Arizona fix and flip loans are a great option because they are a short term loan that is secured y the value of the property that you are buying. Real estate investors normally purchase a property, renovate and resell within the term of a hard money loan which is around a year at the most. But if you are only doing minor repairs, you can request that the loan term be even shorter if that is what works out best for you. The private lenders are much easier to work with and can even create a custom payment schedule in some cases.

Cash out Arizona fix and flip loans require you to own another property. In this case, you are refinancing or taking out a loan on a property that you own outright to use that equity to invest in a property to flip. This could be refinancing your current home to use that equity or you could refinance another investment property that you have to make the purchase. But the concern is that you need to complete your flip to at least break even and not risk losing both properties.

HELOC Loans

Home equity line of credit loans also require that you own a property or have a great deal of equity in a property. For this loan, you secure a line of credit against the equity in your home or another property that you own. Again, you are risking that property if you fail to sell the flip and cannot pay the HELOC payment. But with a line of credit, the line of credit is somewhat revolving. So each payment that you make provides you with more options for reusing the line of credit to make purchases for materials for the renovations or other projects.

Know Your Options

There are many options for funding a fix and flip. But only after you have researched all of your options can you determine which loan will best meet your current needs. Some short term loans will require a large balloon payment at the end of the term while others can be refinanced to extend the term if you are unable to repay the full loan amount. It is also important that borrowers understand that using the equity in one property to purchase another property represents a far greater risk than using the property being purchased as the collateral for a hard money loan. Making a solid choice for your fix and flip loan will get you off to a great start on your real estate investment project.