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Thursday, February 7, 2019

Things To Consider With An Arizona Bridge Loan

(An Arizona Bridge Loan is a great tool for both homeowners and real estate investors. They offer the opportunity to leverage the equity in a property that you currently own.)

An Arizona Bridge Loan is a financial tool that allows for the use of equity in a property without actually having to sell the property. These short-term loans can be used when a homeowner wants to move to a new home but must also sell his or her current home to make the move financially possible. The loan is actually working as a bridge between the two transactions as it is not always possible to coordinate a sale and purchase of something as large as a home.

These use of a short-term loan can allow you to move directly from your old house to your new house rather than moving into a rental. If your old house sells quickly then you could be forced to move into a rental while you find your next home to purchase. This is not only stressful, but it can be very expensive to pay rent plus storage fees as well as paying the movers for two moves instead of just one.

Short term loans, also called Hard Money Loans in Texas, also offer the benefit of funding very quickly. The loan is based on the equity in your current home, and because of that it can be approved and funded in just days. This is a huge benefit over the time it would take to secure a traditional mortgage which is based on your creditworthiness and debt to income ratio. Even when banks are not interested in loaning you money due to your income or outstanding loans, many private lenders are happy to offer hard money.

Drawbacks of an Arizona Bridge Loan

Short-term Arizona Hard Money Loans offer some great benefits but those services do come at a higher price than a traditional loan. The interest rate is going to be several points higher than a traditional mortgage loan, and there are going to be other fees as well. Private lenders have more freedom to structure the loans as they choose, but most will charge interest, points at the finding of the loan and a few fees to cover the administrative costs as well as the inspections fees. But the news is not as bad as it may first appear, because you will only be paying this higher rate for a few months in most cases.

Some Good Advice

Using an Arizona Bridge Loan can be a very wise choice even though the cost is a little more than a traditional loan. In many cases, these Arizona Hard Money Loans are used when a traditional lender is not willing to fund a loan. And that means that hard money from a private lender is the borrowers only choice. So it is better to pay a little bit more than to miss out on a great deal. Borrowers just need to be certain to read the entire loan document and understand the agreement prior to signing it.

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.

Wednesday, February 6, 2019

An Arizona Bridge Loan Can Be A Win-Win Solution

(An Arizona Bridge Loan can solve a very unique problem for many homeowners. It could be your solution when selling a home and buying a new one.)

It can certainly be very difficult to coordinate the sale of your current home to close one or near the same date that you are purchasing your new home. And it can be equally as challenging to sell your home and then move into a rental while you search for your next home. And even worse for many homeowners is the thought of carrying two mortgages while they hope that their old house sells. The simple solution is to secure an Arizona Bridge Loan that will get you through this challenging time.

An Arizona Bridge Loan is a short-term loan that does just what the name says, it helps to bridge the time period between two home sales or other financial transactions. In some cases, the first transaction is buying the home and the second will be quickly selling it after a fast renovation. These fix and flip projects are great for short-term loans rather than a tedious traditional mortgage. And the 12-month term on a bridge is also a near perfect fit for a fix and flip or for a traditional buyer who is waiting for his or her first home to sell.

In addition to flippers, traditional buyers like to use these short-term loans when they are downsizing. In most cases, the homeowner has substantial equity in the current home and can use that to secure the Arizona bridge loan to purchase a smaller home. That allows for time to move into the smaller home and make the needed repairs and tidying up projects to the old house before listing it on the market. And of course, it is much nicer to only need to focus on finding your next perfect home rather than also trying to worry about getting your current home ready to sell.

Securing A Short Term Loan

Getting any type of loan can take some time, so you need to begin the process as soon as you start looking for a new home. It is always nice to know that the process is moving forward in case you find your dream home very quickly. Some mortgage companies offer these short-term loans to bridge a gap for customers but not all do. You will need to inquire with your lender to know if you can finance with your current mortgage holder or if you need to find a short-term lender.

The Bridge Process

Once you have found your dream home and secured the short-term loan, you are ready to move and then get your current home ready to sell. During this time, you will actually own two homes and have two loans out against them. But in most cases, homeowners only make a few payments on the bridge before they sell their old house. The proceeds of that home sale are used to pay off the short-term loan and any interest owed, and the rest of the money is yours to apply to your new house or to invest or save if the new house is going to be paid in full. This short-term loan is a great resource to assist you in a complex process of selling and buying a new home.

COMMERCIAL HARD MONEY LOANS WILL HELP YOUR CAPITAL NEEDS

Investors use hard money when an opportunity arises and they need to jump on it quickly before someone else grabs it or when they need to bridge a gap between where they are right now and where they want to go.

Hard Money Loans in Arizona can be referred to as many things— one such thing being a bridge loan. They are called this because in essence they are bridging an investor from one opportunity into another. These are the same type of loans that investors take out when they are flipping homes or commercial real estate—such as a mall or an office building.

When you apply for a traditional loan at a bank they generally look at the last three years of your businesses financing to see if there is enough collateral and cash flow to satisfy their lending requirements. When these requirements are not met or when a business has not existed long enough this will result in non-approval of the loan. This is why there are Texas Hard Money Lenders.

COMMERCIAL HARD MONEY LOANS OPEN UP OPPORTUNITY FOR BUSINESSES

When a bank turns down a borrower for either not being established long enough or has insufficient cash flow a borrower can turn to a hard money lender. These business owners can use hard money. This is money that is used to transform a business to where it needs to be in order to obtain traditional financing.

Hard Money Loans in Arizona are short-term, interest-only loans that typically have loan terms from six months to three years. The terms are short because these loans are intended to only be a short-term fix. Once the business owner has the capital to bring their business up to par, they can secure long-term financing.

A good example of when hard money lending may be useful is when an investor wants to purchase an office complex that is vacant and needs to be rehabbed. Because there is no income being generated from this property a bank will not approve the loan. However, a commercial hard money lender will approve the loan and use property as collateral to secure the loan.

A hard money lender can explain many different hard money scenarios that can work for an investor’s unique situation.

CAN COME TRUE WITH PRIVATE MONEY LENDING FOR YOUR SMALL BUSINESS

Unfortunately, a small business can’t prosper without funding. Funding can come from many sources—such as family, friends and loans.

If you are fortunate enough your friends and family will have enough cash on reserve to help you grow your business. However, the reality is most of us do not know many people that can just toss us thousands of dollars to invest in our small business.

A business owner can take out a Arizona small business loan from the bank. However, banks require stellar credit and enough monthly income for them to feel secure loaning money to a business— and let’s not forget the agonizing process of a bank loan. A business owner can easily wait months for approval and funding from a bank.

WHERE CAN YOU GET A QUICK SMALL BUSINESS LOAN

Private investors provide small business owners loans with capital to get their project off the ground. These investors can make a huge difference in the success of a business. There are clear benefits of working with a private investor—the main benefit being the quick access to capital. Private funding serves small businesses that may not qualify for bank loans.

Capital is the most important factor of a small business—it is what makes or breaks a small business. Bottom line is a business cannot grow without money. It can be difficult for small business to obtain approval for a bank loan and without private lending many businesses could struggle to grow or even to keep their doors open.

Small business owners with poor credit or new small businesses have a great opportunity for obtaining a small business loan with private investors.

Private investors are a good alternative to traditional bank loans. Most banks are weary about lending to new businesses and frown upon business lenders with poor credit. Private investors are also referred to as Texas Hard Money Lenders. These investors will use the business owner’s commercial real estate as collateral for the loan. The property is used to secure the loan and protection in case the borrower defaults on the loan. This is great news for business owners that do not qualify for a traditional bank loan. The loan you receive is almost completely determined by the collateral that is offered to the hard money lender. Because private money, or hard money, loans are not available through the bank, you will need to find a local hard money lender. If you are a small business owner in need of financing, please contact us at level4funding.com.

HOW YOU CAN BUY A NEW HOME BEFORE SELLING YOUR OLD ONE

Sam and Judy had just put their home, of 20 years, up for sale. As, people do, when they are selling their home, they began looking for a new home. Luckily, or so they thought, they found the ideal house only a few days after putting their house up for sale.

When Sam and Judy found the home, they wanted to purchase they were so excited. Their realtor said it shouldn’t be a problem for them to put an offer in because they could put a contingency in the contract. However, that served to be a great problem.

The house Sam and Judy had decided on was a popular one. It was a steal of a deal and had more than one offer in on it. Unfortunately, the seller felt a contingency wasn’t necessary due to the fact that there were cash buyers putting offers in on the home. Sam and Judy lost that home and were feeling a bit concerned. The home they were selling had repairs that were necessary, and their realtor had warned it may be on the market longer than they were hoping.

WHAT YOU CAN DO WHEN YOU CAN’T COMPETE WITH CASH BUYERS

When a seller doesn’t want a contingency in the deal a smart move is a Arizona bridge loan. A bridge loan, as the name suggests, offers a bridge that allows a buyer to purchase a new property by using the home they currently own as collateral.

A Arizona bridge loan is also known as a “gap financing.” They are there for home owners who want to purchase a new home before selling the home they are currently in. Unless you have a large nest egg of cash, most people cannot buy a new home before selling the old one—and in a competitive market most sellers frown upon a contingency. It is very difficult to qualify for two mortgages at one time let alone pay on two mortgages.

This is where a bridge loan can be a buyer’s saving grace. A bridge loan can come from a hard money lender. A hard money lender will loan the money to you and usually give you a few months before a payment is due. Once due, the monthly payments are interest only payments. When the old home sells, the borrower will pay the loan in full in what is called a balloon payment. This allows the borrower to purchase their new home and have time to sell their old home without carrying two mortgages. Once the old home sells, the buyer has money to pay off the loan and pocket the rest of the cash as profit.

Typically, a hard money lender will finance up to 80% of the combined value of both the new home and old home. The other 20% or so usually comes from home equity or savings for the new down payment. There are lenders that will lend more than 80% but be prepared to have the other 20% handy.

Bridge loans can be a life saver for borrowers wanting to purchase their new home without waiting on the old one to sell.

Bridge loans take a shorter time to process than a conventional mortgage. Typically, these loans are approved, and funds are released in two weeks or less. These loans will have a slightly higher interest rate than loans from a traditional lending institution, however, remember you will only be paying interest on the loan until the last payment—the balloon payment.

Tuesday, February 5, 2019

WHAT TO EXPECT WITH HARD MONEY LOANS

Hard money loans are funded by individual investors when traditional lending institutions can not approve a borrower for what they need or a borrower needs quick financing.

A typical hard money loan will run between 7% and 15% in interest rates and cost anywhere from 4 to 7 points. Points are an upfront fee of the loan amount. Hard Money Loans in Arizona are short-term loans that generally run between six months and three years.

If you took out a loan with a bank for $1,000,000 you would be paying back approximately $6,000 per month—that is including interest. With a hard money loan you would be paying back approximately $8,700 a month. This is due to the higher interest rate of a hard money loan.

Many people will read this and think, why in the world would I take out a hard money loan if it is less expensive to take a loan from a traditional lending institution. Well, let’s take that $1,000,000 we were discussing above. If an investor finds a commercial property that is being sold for $1,000,000— but there is nothing there except empty rooms, however the investor has a clear vision of what they can do with that building. What do they typically do? They go to their bank. Well, because there is presently no income being generated the bank is most likely not going to approve any amount of loan. So, what does an investor do if they don’t have $1,000,000 laying around. They find a hard money lender.

WHY WOULD A HARD MONEY LENDER INVEST IN MY PROJECT?

Hard money investors are investors that choose to invest money into real estate rather than traditional investing such as stocks and bonds. They do this because they make money much faster than waiting around for the ebbs and flows of the stock market.

Texas Hard Money Lenders have money and they want to invest in a project they feel will be profitable for them, as well as you. And this is where they make their money. The borrower will present their project, and show that they will contribute anything they are able to contribute to the project—whether that be money down, showing ways to cut corners or having an active role in the project themselves—such as pouring their blood, sweat and tears into the project. The hard money lender is able to approve the loan within minutes and distribute the funds within days, unlike banks.

Where Texas Hard Money Lenders make their money is through points and interest—just like a bank. However, a borrower pays for the convince of quick loan approval and funding of properties that banks will not fund through a higher interest rate.

Although hard money loans cost more initially, it will give the quick funding required and allows you to prosper in the future.

It is important that when you take a hard money loan out you have a clear and realistic vision of your investment. Make sure that when you meet with your hard money lender you have a crystal-clear business plan that you believe in—your hard money lender can’t believe in an investment if you don’t.