Beretta Only: Pros and Cons of Hard Money Loans in Colorado

Wednesday, January 2, 2019

Pros and Cons of Hard Money Loans in Colorado

No loan is perfect for every person and every need. But understanding the benefits and drawbacks of Hard money loans in Colorado will help you to use them properly and to their greatest benefit.

Not everyone can qualify for a traditional mortgage from a bank. In some cases, the potential borrower does not have a good enough credit score or might not have an established credit history. Other times, a recent divorce could be the reason for the denial of a loan application. And the self-employed borrowers always have a difficult time verifying their income and convincing a bank to grant a loan request. But all of these people have the option to borrow from the less traditional but still legitimate private lenders who offer Colorado hard money loans.

Hard money loans in Colorado are asset-based loans which mean that the borrower has to provide collateral for the loan rather than have a high credit score to secure the loan. In most cases, the collateral is the property that is being purchased with the money from the loan. Less frequently, the borrower uses other assets, property or items of substantial value as the collateral on hard money loans in Colorado. But the benefit of securing the loan with a low credit score makes hard money very attractive to many borrowers.

In addition to being less difficult to get, hard money is also favored for their less challenging application process and fast funding. Because the lenders are private groups or individuals, both processes are much more expedient than traditional lenders methods. Rather than huge piles of documentation a hard money loan only requires a few documents to show income and banking history and information about the property. This cuts through a lot of the red tape that bankers request. And the approval is based solely on the value of the collateral so approval and funding can happen faster than a traditional bank.

The Down Side

Nothing is perfect and hard money is no exception. The fees for hard money are higher than a traditional loan and the time frame is much shorter as well. This can make the payments higher and be seen as a negative for some borrowers. In addition, it is not uncommon for these loans to have a clause that includes a pre-payment penalty if the loan is paid off early. But that is simply a way for the lender to be assured that he or she will earn a specific amount for the money that is being risked.

Know Both Sides

Hard money is an alternative that is not worth the higher price or higher payments to some borrowers. But it is also clearly an opportunity for other borrowers who have no other choice for a loan. The key to deciding to use hard money is knowing the total cost of the loan as well as all of the terms. With all of that information, borrowers can make a well-informed choice and know that hard money is a good solution to their lending 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

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.