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Monday, May 28, 2018

What Hard Money Lenders Arizona Are Looking For

Understanding what hard money lenders Arizona require to fund a loan will make your application process fast and easy so you can move forward with your real estate investment deal.

Most people feel a great deal of apprehension when they are requesting a loan. There are mountains of paperwork as well as many lofty qualifications that must be met. And even after attempting to meet all of the criteria, many potential borrowers are turned down. But knowing what hard money lenders Arizona require to fund a loan request can turn a difficult situation into a very successful investment deal.

Unlike traditional loans which are based on your creditworthiness and ability to repay the loan, hard money loans are based on the value of the real estate being used to secure the loan. This collateral is really the deciding factor on loan approval and the amount of the loan. So credit issues or no credit will not eliminate your chances of securing a hard money loan.

You also need to understand that hard money lenders Arizona are in business to make money. So even though they are not imposing the credit qualifications that a traditional lender would use, the hard money lender Arizona is going to protect his or her investment. This is done by only funding a loan that is between 65% and 75% of the value of the collateral property. This ensures that if the borrower defaults on the loan, the lender is still able to sell the collateral property to recover the full balance on the loan.

Hard Money Down Payments

Because hard money lenders offer less than the full purchase price of a property, buyers need to furnish the remaining funds in the form of a rather substantial down payment. This actually is a second form of security for the lender as buyers have their own funds tied up in the deal and will work even more diligently to make the deal a success and repay their hard money loan. Lenders look at the borrower having “skin in the game” as a great source of motivation.

A Good Option When Used Correctly

Hard money loans are a good option for many borrowers as long as they understand the process of the loan and how to use the money correctly. Paying a higher interest rate on a short term hard money loan can often be the difference between closing a deal and losing out to someone else who is already funded. Then circling back to a traditional lender to refinance at a lower rate and a longer term is the smart move. But this entire process hinges on borrowers knowing how a hard money loan works and being prepared to work within the terms of this type of loan.

Being prepared to provide the large down payment and being willing to use the full value of the property as collateral on the hard money loan are two steps that each borrower much take to benefit from a hard money loan.

Sunday, May 27, 2018

Understanding Loan to Value Ratio for Hard Money Loans Arizona

Understanding the loan to value ratio for hard money loans Arizona is critical to knowing how much money you can request. Without knowing the LTV you have no idea what lenders would be willing to fund.

Because hard money loans are secured with real estate, it is critical to understand how lenders determine the dollar amount that they are willing to lend. This determination process uses the loan to value ratio which is the loan amount divided by the property value. In most cases a hard money lender will fund up to 65% to 75% of the current property value. What this means for anyone who wants to use funding from hard money loans Arizona to make a purchase is that they must have cash or other financing for the remaining 25% to 35% of the purchase price.

It is important to understand what the loan to value ratio is on the property that you are purchasing so that you can be prepared to pay the remaining balance to complete the purchase. Some borrowers will seek a partner to contribute the remaining funds or others will use other properties as collateral to borrow the remaining funds.

On some rare occasions lenders will use an alternative ratio called the after repair value. This is basing the value of the property on its potential value after the buyer makes the repairs. It works in the borrowers favor as he or she is able to get a larger amount for the hard money loan. The down side is that this type of loan poses a greater risk to the lender who is likely to demand that the borrower pay a higher interest rate as compensation.

Hard Money is Always Secured

Understanding that hard money loans Arizona are all based predominantly on the value of the property being purchased is Important. It is also important to know that the lender will only offer a percentage of that property value as a way to ensure that the property is always worth more than the balance of the loan. This is so that in the event of a default on the loan, the lender can sell the collateral property and recover the full loan amount.

More Risk=More Cost

Hard money lenders are in business to make money just as real estate investors are buying properties to make money. All lenders calculate the amount of hard money loans Arizona in the same way. The only reason that some are willing to offer a higher percentage is because they are willing to assume a greater risk. And in return for that greater risk, the lender is going to require that the borrower pay a higher interest rate on the loan. But if you have no other way to secure the funds needed to close the deal, then paying a higher interest rate is better than losing the deal all together. You will always have the opportunity to refinance the loan in a more traditional manner at a later point in time to improve the interest rate.

Saturday, May 26, 2018

Reasons to Use Hard Money Loans Arizona

Knowing when to use hard money loans Arizona is important to the success of many real estate deals that you might encounter. Selecting a hard money loan for the wrong deal can be a very expensive mistake.

There is never a one size fits all solution for your financial funding needs. It is important to understand that even though hard money loans Arizona have a great many benefits, they are only suited for certain types of deals and in certain situations. Knowing the situations that warrant a hard money loan will ensure that you are using this financial tool correctly and getting the greatest benefit from hard money loans Arizona.

Time can be a very critical factor in some real estate transactions. But funding a traditional loan can easily take 30 to 45 days if you are fortunate. But funding for a hard money loan can often times progress in just a few days. So when a great deal is very time sensitive, it makes sense to pay a slightly higher interest rate for a few months to close the deal. The borrower then has the time to follow the traditional path and apply for a loan at a lower interest rate from a traditional lender.

Having no credit makes it very difficult to secure a loan. But if you have found a great property to purchase then using hard money is a good way to secure the loan that you need to purchase the property. And just as with the time sensitive loan mentioned above, the borrower can then invest more time in finding a traditional loan at a lower interest rate.

Many consumers have experienced a great deal of financial issues in the last few years and as a result they have bad credit. Bad credit will all but eliminate the possibility of getting a traditional loan. For those folks with bad credit, hard money loans Arizona is one of the few ways that they can secure a loan. And even though the interest rate is higher than a bank loan, it is the loan that they need to make the purchase.

Hard Money Loans Are a Good Option

There are some circumstances that are beyond a borrowers control such as other potential buyers or a seller who is working on a very tight time schedule. In other cases, the borrower might have bad credit due to past mistakes or poor decisions. But regardless of the reason, when a bank is not an option, some deals can work out to be very successful when funded with hard money.

Make the Smart Choice

Having credit issues or working on a very tight schedule is no reason to pass up a great deal. Using hard money loans correctly can allow you to close a deal and eliminate the issue of time or poor credit. Then with the deal completed, you can focus on finding a more affordable means of refinancing the short term hard money loan.

Wednesday, May 23, 2018

What Are Hard Money Loans Arizona?

Understanding hard money loans Arizona will provide investors with an additional lending resource when they are interested in investing in real estate. It will also greatly reduce the time involved in securing funding.

Hard money loans Arizona are just loans that is secured by real estate. In addition, these loans are funded by private investors or lenders instead of the traditional banks or loan companies. In most cases, the loan is short term such as a 12 month time frame or even as short as three or six months. But the term can be extended to as long as two to five years. Another term used for this type of loan is asset based lending.

The terms of hard money loans Arizona are flexible because the lender is not obligated to follow the same rules and restrictions that traditional lending institutions must follow. The private lender is able to work more closely with the borrower to create terms that are mutually beneficial to both parties. For this reason, many borrowers prefer hard money loans Arizona over traditional loans.

In addition to being flexible with the repayment terms of hard money loans, borrowers also like the fact that it is much easier to qualify for a hard money loan than a traditional loan. Instead of the lender reviewing the borrowers credit, income and current debt load, the lender is really only interested in the current value of the property that is going to be used as collateral for the loan. This allows borrowers with no credit or poor credit to still be able to qualify for the hard money loan.

Deals the Could Require Hard Money Loans

Hard money loans are not the perfect solution for any type of deal. They are financed at a higher rate than a traditional loan and also can have additional loan fees which are charged to the borrower. In most cases, if a borrower can get a traditional loan, then that is the best solution. But when banks are not willing to fund a loan request then hard money is a viable option. Deals such as a short term fix and flip, land loans, construction loans and deals that have a very short time frame for funding are all prime examples of the perfect reason to select a hard money loan.

Properties to Secure a Hard Money Loan

A borrower can use just about any type of property to secure a hard money loan. The only qualification for a property is that the lender be willing to accept that type of property as collateral. Often times a lender would prefer a single family home as collateral because it has a more stable market value and is easier to liquidate if the borrower defaults. But multi-family residential, commercial, industrial and even unimproved land can all be used to secure a hard money loan.

Understanding how a hard money loan works and when it is beneficial, offers borrowers a legitimate option for funding when a traditional lender has declines a loan application.

Tuesday, May 22, 2018

Tips to Secure a Business Loan Arizona

Securing a business loan Arizona can be challenging. But following a few tips can greatly improve your chances for a fast approval.

Securing any type of loan can be a very stressful process. But the application process for a business loan Arizona can appear extremely overwhelming. Unlike a personal loan application which is fairly simple and straightforward, a business loan application requires a great deal of information about the business and even the personal finances of the owners or principles of the company. To ensure that you are investing your time in a successful loan application, you will want to be sure to follow a few simple tips that have been found to produce successful results.

The business finances are critical to any loan approval as you might expect. The company should have been profitable for at least two years to have a good chance at securing funding. Having financial statements and credit reports in good order before requesting a loan is very important and will save you a great deal of time when completing application. Also having the owner’s information readily available will make the process less stressful.

In addition to financial information, lenders want to have a good understanding of the company, its history and the experience level of the owners and senior management team. This means detailing the birth and growth of the company as well as explaining the business plan and reason for the loan request. Simply stating that it is for growth or expansion is too vague. Explain what the funds will be used for, how they will benefit the company and the expected return on the investment. Details about how the loan will help the company achieve goals in the five and ten year plan will demonstrate strong and experienced leadership and increase the lenders confidence in your business.

Think Local

Unless you have a very large and well established business, a local lender might be a better option for a business loan Arizona. Local lenders tend to place more value on business history, involvement in the community and the local economy. Large national lenders work more from a very strict formula for loan approvals where a local lender has the ability to “bend” the criteria slightly to process loans that are less favorable. Knowing this though, be certain to have a very well prepared and detailed loan application for local lenders. They will be even more motivated to learn about your business and the professional history of the management team.

Be Well Prepared

When seeking any business loan Arizona, detailed preparation is your best tool for success. Detailed financial information and history about the business will help to establish the creditworthiness of the business. This information presented to a local lender in a professional format is going to create a good first impression for you and for your business. And though the process might take some time, you will find that you stand a much better chance of getting your application approved.

Tuesday, May 15, 2018

How to Understand Repayment Terms for Business Loans Arizona

When trying to obtain business loans Arizona and decipher the sometimes complicated jargon in the agreement, it’s critical to know what is of expected of you in terms of paying back the loan. Level 4 Funding breaks it down.

You need to start with a clear reality about what it’s going to take to get a loan approved — and then be able to meet the repayment term schedule. Terms for business loans Arizona are totally different than home mortgage payments, for example, that you might have for 30 years. These loans at loan-term can range from five to 20 years, give or take, and at short-term, between three and six months to three years. However, the latter will also include higher interest rates.

The short-term business loans Arizona are designed for business owners that need cash and they need it now. This could be for a number of reasons (need to make payroll, want to purchase a building, need to do some important renovations or upgrades to pass inspections) — all of which are time sensitive. These loans can be approved and turned around with cash in hand for the borrower within as little as 48 hours, give or take. However, ultimately, these loans can be more difficult to pay off because of the shorter repayment time allotment plus the additional high interest rates.

With long-term business loans Arizona, the time frame for repayment stretches over a much longer course of time, and they are amortized loans, which means that the loan needs to be paid in fixed installments through the duration of the payment terms. This is similar to how homeowners pay their mortgage — with principle and interest all together. But sometimes there is a balloon payment required at the end of the terms, meaning the borrower much pay the remainder of the loan back in one large sum, which can be difficult as well.

Be sure you are aware of any penalties.

While you would think that paying your loan back early would be rewarded, it can actually work against you. Some loan agreements charge a penalty for early payment (likely because they would like to keep receiving that high interest through the term of the agreement).

Give a professional a call to help you understand the intricacies of repayment terms.

When seeking a loan and understanding all the ins and outs of this complicated application and agreement contract, it’s important to work with someone you can trust. Level 4 Funding’s lenders are professional, experienced and they care about finding you the right loan with the repayment terms that work for you and your business. Give us a call today and let us help you discover how easy and simple the loan process can be.

Thursday, May 10, 2018

How to Make Getting Hard Money Business Loans Quick and Easy

When it comes to getting approved to hard money business loans, it can be an arduous process. But Level 4 Funding offers simple “ABCs” to help you become eligible for loans and get approved fast!

When you decide you want to get hard money business loans for your company, there is a lot you can do to prepare before you ever even meet with a lender. For example, as with most anything, research can begin on the Internet. Do some digging about the types of loans available to business owners like yourself in your same industry and specific to you needs (for example, are you looking to purchase equipment or a building? – there are specific loans designed for each of those needs).

Once you’ve done some initial research about the types of loans out there, do your due diligence on lenders. While there online marketplaces that make getting a loan without ever leaving the comfort of your coach very doable, it’s also important to make sure you have the proper expertise and guidance — especially if you are first-time borrower. That comes from working with a professional lender.

Look for lenders that are local, have experience with loans in your specific industry and who can share their portfolio with you. Getting a good feel for your lender and moving forward on the same page makes the process of applying for hard money business loans much quicker and easier.

When you have made the decision on a lender, you can then decide if you need a short-term or long-term loan.

There are so many different ways to go about obtaining the loan as well as the kind of loan. Once you begin the application, you and your lender can work together on fine-tuning the right terms for your loans.

Once you submit your application, there are some evaluations that take place.

While with conventional banks and long-term loans, the process is much longer, requires a more complex application and proof of multiple forms of documentation, financials, credit reports and so on short-term loans with an alternative lender move much more quickly. The application process and fairly straightforward and the lender is mainly interested in collateral — and not much else. So if you want to move the process along, be prepare to prove what you can provide as collateral to secure the loan. It can even be the equipment or property that you intend to purchase with the loans. It’s a good idea to obtain legal advice when it comes to reviewing the term agreements. Be sure to take your time with all the documents that will require your John Hancock. These terms are binding with that signature. This is also a good time to review the entire contract with a fine-tooth comb to ensure that you haven’t missed any clauses about additional charges, fees or even pre-payment penalties. When you are ready to find a loan that’s right for you, call us at Level 4 Funding today.