Beretta Only

Saturday, January 19, 2019

Qualifications for an Arizona Hard Money Loans

Many borrowers are very surprised when they learn that the requirements to qualify for Arizona Hard Money Loans are much different than those of traditional loans. Understanding these differences can be very helpful to certain borrowers.

Because Arizona Hard Money Loans are asset-based, meaning the approval is based more on the value of the property being purchases than the borrower’s creditworthiness, credit scores are not a much of a concern as is the case with traditional loans. Rather than the borrower’s credit score is the most important criteria, the actual value of the property is more important. So in most cases, a credit score of about 550 is enough to secure most Arizona hard money loans.

The lender is going to require that the borrower show proof of an income that will allow him or her to make the loan payments for the hard money request. In most cases, this is done by submitting paycheck documentation or other income streams. The lender might also request a few months of bank statements to show that the income has been consistent and to track cash flow for other bills.

If the loan is being used to purchase a fix and flip property, the lender is likely to request information about the borrower’s level of experience in the fix and flip industry or the real estate business. This is to show the lender that the borrower has the knowledge, skill, and understanding needed to complete the renovation project as well as the ability to keep the project on the needed schedule for completion and resale. Some lenders will also as for a formally written exit strategy. This is often a detailed account of a contingency plan in the event that the project is not completed on time or if the property does not sell as quickly as expected.

The Property

Because the property being purchased is going to be the collateral for the loan, the lender is going to be very interested in the current condition of the property as well as the potential for the increase in property value. In the case of fix and flips, the demo involved in the early phase of the project can actually drop the property value for a time. The lender always wants to be certain that the condition of the property is not so poor that the demo could make the property almost worthless. Having a property with good potential for value increase is the best way to secure a hard money loan.

Know the Criteria

Private lenders are free to set any criteria that they choose to for borrowers. It is always best to ask each potential lender what his or her criteria are for hard money loans. This can help you to save time and money when you are applying for a loan. This information, along with the interest rate and a complete fee schedule from each lender will allow you to evaluate all of your options and select the lender and the loan that will best suit your 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.

Friday, January 18, 2019

Arizona Hard Money Loans in a Nutshell

Not every consumer understands Arizona Hard Money Loans or how they can benefit from them. But a small amount of information can explain the benefits and how to use them.

When you are denied for a traditional loan from a bank or other lender, it can be very frustrating and it can feel like your dream of owning a property has come to an end. But there is an alternative type of loan that is very helpful for many borrowers. Arizona Hard Money Loans are short-term loans which are funded by private lenders. Normally the loan term is around a year but the loans can be as short as a few months or extend up to around the five-year point. The loan terms will outline the payment schedule but in most cases, a monthly payment will be due.

The amount of the loan is based primarily on the value of the property that is being purchased. This is called asset-based lending and means that the property, the asset, is being used as collateral for the loan. The reason that this is beneficial to the borrower is that his or her credit score is not the primary concern when the lender is evaluating the loan application. So borrowers who have a credit score too low to qualify for a traditional loan can still qualify for hard money.

As an asset-based loan, the lender is far less interested in the borrower’s personal credit, payment history, and overall creditworthiness. This means that there are far fewer documents required when submitting a loan application for hard money loans. In most cases, the lender will request a few months of bank statements as well as proof of income to verify that the borrower has the income and capability to make the loan payments.

Less Time Involved

With fewer documents required for the loan application, borrowers will be able to quickly prepare their documents and in return, the lender will be able to very quickly review the documents. In some cases, a traditional loan application can linger for months before being approved or denied while hard money can be approved in just a few days in some cases and almost always in less than two weeks. So for borrowers who need money quickly, Arizona Hard Money Loans are a great option.

Legal and Legit

Even though hard money is considered a non-traditional type of loan, it does not mean that the loan is not legal and legitimate. It also is no indication that the loan can be allowed to go unpaid as the loan documents are as legal and binding as any loan from a bank or a mortgage company. Hard money is just a different type of loan from a different type of lender which is used to meet a unique need for some borrowers. Understanding the terms of your loan agreement is always important and hard money is no exception. Be certain to read the entire loan document and seek legal advice if there is any aspect of the agreement that you do not understand before signing it.

Drawbacks of Arizona Hard Money Loans

Nothing is ever perfect for every situation and Arizona Hard Money Loans are no exception to that rule. But understanding the drawbacks of these loans can help borrowers use the loans correctly and for the greatest benefit.

Most borrowers quickly discover that the cost of Arizona Hard Money Loans is often substantially more than the cost of a traditional loan. But there are reasons that the loan is more expensive, and for many of the borrowers, hard money is their only option. Having a loan that is not based on a credit score is all that gets many borrowers funded after a foreclosure or other financial issues. While other borrowers are unable to wait through the 60 to 90-day application and evaluation process that traditional lenders impose.

In particular, the interest rate charged by hard money lenders is double to triple the rate that a traditional lender will charge. But again, borrowers who have no other option are willing to pay the higher rate to get a loan. In some cases, the borrowers can agree to a shorter term loan which decreases the interest cost. Other times, the borrowers will carry Arizona Hard Money Loans long enough for their credit to improve, then refinance with a traditional lender.

Another cost drawback for Arizona Hard Money Loans is that the lenders are not required to follow the same rules as traditional lenders regarding fees. The lenders can charge just points to cover their administrative fees or they can itemize the fees. The lender is free to select any method that he or she likes to set up the fee structure for the loans.

Time Frame

The fact that hard money is a short-term loan can also be seen as a drawback for some borrowers. Paying back a substantial loan in just a few months or even a few years can mean that the payment schedule is very aggressive. These very large monthly payments can be difficult to continue to make. Some lenders will allow borrowers to pay the interest each month in addition to only a small amount of the principle, but that required a very large balloon payment at the end of the loan term which can also be hard for borrowers to make.

Make Smart Choices

Nothing is perfect, but there are usually ways to work around the downside or drawbacks of any situation if the reward is high enough. Securing hard money when you cannot qualify for a traditional loan is a big reward for some borrowers. And those borrowers are willing to pay a higher price for the loan. Other borrowers understand that they need the loan very quickly and that hard money is the only choice in the short term. They then work diligently to find a more traditional and low-cost way to refinance the loan. Understanding how hard money works and the costs involved will help you to evaluate the costs as well as any other options that you might have and make a well-informed decision about the money that you borrow.

Creative Solutions For Rental Property Loans in Arizona

Securing a mortgage for your personal home is different than getting a loan for an investment property. You might need to think creatively to secure Arizona rental property loans.

There are many differences in the finance process when you are seeking investment loans including rental property loans. In most cases, you are already carrying a loan for your own home, so that makes getting a traditional loan even more challenging. And because mortgage insurance does not cover investment properties, you will also need to be able to invest at least 20% of the purchase in the down payment. But there are a few tips that can help you to secure Rental Property Loans in Arizona to begin your career in real estate investing.

As mentioned, the down payment for a loan to purchase a rental or any investment property will require a deposit of 20% or more. And it is important to remember that having instant equity in the property is always good for a borrower. If you can invest 25% or more in the down payment, that equity will help to get you a lower interest rate as well as increasing the potential for securing any loan that you are seeking. A high credit score is also important when seeking a very competitive interest rate and getting approval for a loan.

Securing Rental Property Loans in Arizona can require some flexibility from the lender, so you are more likely to get financed when using a smaller bank or mortgage lender. Larger traditional banks and mortgage lenders tend to be very strict when it comes to the loan terms and the qualifications required to secure a loan. But smaller lenders and private hard money lenders are known to be much more accommodating to their potential borrowers.

Owner Financing

As the bank's loan criteria have become more stringent, sellers have become more open to owner financing. There are simply not as many well-qualified buyers, and a motivated seller is often willing to extend owner financing to potential buyers. But it is critical that buyers have any owner financing documentation reviewed by a legal professional to be certain that the deal is acceptable to the buyer. Terms and clauses in an owner financing contract are legally binding once signed and should not be one-sided to favor only the owner.

Be Creative

There are many ways that a resourceful buyer can acquire the cash needed to purchase a rental property. In some cases, equity or a line of credit on a personal residence can be used for the down payment. Other buyers choose to cash advance credit cards or to secure a personal signature loan to make a down payment on an investment property. Others turn to friends and family for loans or even a peer-to-peer lending site. What is important is that you are realistic about the amount of money that you can repay and the number of loans that you can manage to pay off at one time. Overextending yourself to make a down payment on a rental property is taking a large risk and could end up costing you the property before you even pay off the down payment loans.

Avoiding Foreclosure with Hard Money Loans

If you have enough equity in your home, then Arizona Hard Money Loans could be a good short-term option to avoid foreclosure. But understanding these loans is critical to your success.

Arizona Hard Money Loans are short-term loans which are based on the value of the property being purchased rather than the borrower's credit score. These asset-based loans offer a solution for borrowers with a poor credit score as well as those with no credit history. But in some cases, these loans are a good short-term option for a homeowner who is experiencing financial issues and it trying to avoid a foreclosure.

Many things can happen that make it difficult for a homeowner to make mortgage payments. Sometimes there is the loss of a job or others it could be due to an illness or even the death of one of the owners. But until the homeowner is back on his or her feet, making a mortgage payment can be very difficult. And when this occurs suddenly, there might not be time to seek a home equity line of credit or a traditional second mortgage. Arizona Hard Money Loans can be a fast solution to allow the homeowner to make mortgage payments while sorting out the financial issues.

The key to making this method work is to work very diligently at securing other financing at a lower rate once you are no longer at risk of a foreclosure. The high-interest rate of Arizona Hard Money Loans can quickly drain any resources that the homeowner might have. Some of the alternative options include getting a home equity loan, a home equity line of credit, acquiring a second mortgage or refinancing the entire home to pay off the short-term loan and substantially lower the monthly payments.

Fees to Expect

When you are researching a short-term loan to avoid foreclosure, you can expect to pay an appraisal fee, points on the loan and an interest rate between 10% and 15% over the life of the loan. If your lender does not charge points, then you should ask for a complete list of fees that are associated with the loan. Obtaining this list in writing can help to avoid surprise fees during the loan closing or as you approach the signing. If you are comparing several lenders, this list will also allow you to compare the total loan cost from each lender to select the loan that offers the best overall rate.

Make a Smart Choice

If you have suffered a sudden financial issue and you have equity in your home, then a short term hard money loan could be a solution to avoid foreclosure. You will need to be very careful to be certain that you completely understand your responsibilities as a borrower and the total cost of each loan option. This is certainly not a long-term option, but it will help to bridge a short-term issue and can help to avoid the additional issues associated with a foreclosure on your home.

Thursday, January 17, 2019

You Can Build Equity and Financial Security with an Arizona Rental Property Loans

Rental property loans allow for individuals to enter into real estate investment and build a consistent form of income that will last for years to come. Equity, security, and growth are all within your grasp.

Rental properties are attractive for a number of reasons: they are a great way to establish equity, home ownership, long term cash flow, and even a retirement. Rental properties are secure in recessions when renting becomes more common. Furthermore, rental property loans Arizona to finance acquisition and renovation are not hard to come by and form a great starting point for new investors.

To invest in rental properties, buy distressed real estate to get into a property for a lower cost with room to even renovate afterwards. Buying distressed property is not always easy in a competitive market with a limited housing supply, but it is possible. Frequenting auctions of foreclosed or distressed homes may be a start. Getting to know individuals who will need to quickly move from an area or home and are looking to sell. Other options are finding individuals who have recently inherited property and are not up to keep up with the cost of property tax or estate maintenance. More options are on the table as well for those intent upon finding them.

Finding a distressed property in an area that will establish a favorable lease rate is paramount. Draw out the total foreseeable costs of the project. How much to acquire a distressed property, how much to renovation will be needed, how much rent can be charged, and how much will financing charges come out to be. Putting the numbers together and looking at properties that offer a great return potential.

Find a Hard Money Lender to Receive Arizona Rental Property Loans

After locating a property that is suitable to be refurbished and rented, find the lending you need. Since conventional lenders do not like to lend on distressed property, hard money rental property loans are your best bet to acquiring and renovating real estate. Hard money lending will allow you to close in quickly upon a suitable property and receive a loan within days to a week. Lightning fast, where conventional lending could take months to complete.

Talk to your hard money broker at Level 4 Funding to secure rental property loans. Further your real estate investments and establish a continuous form of income, possibly even a future retirement.

Talk to a hard money broker to find the rate, term, and loan-to-value needed for the rental investment. After acquiring the property and getting funding to renovate through Arizona rental property loans, find renters and establish a lease rate that allows for paying off the active hard money loan. After refurbishing and establishing a renting rate, bridging to a conventional lender is on the table to reduce the cost of interest required by hard money lenders.