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Thursday, February 7, 2019

Understanding Private Money Lenders

(Most consumers believe that banks are the only place to go for a loan. But there are many legitimate private money lenders in Texas who can meet the unique needs of some borrowers.)

As the name implies, private money lenders in Texas are simply another resource other than the traditional banks and mortgage companies that many borrowers use. These are private individuals or even small private groups who are in business to loan money for a profit. In many cases, the borrowers are real estate investors who are looking to finance a property for a fix and flip or as a rental income property. Other borrowers are individuals who are financially challenged due to a poor credit score or other credit issues. And some borrowers are budding entrepreneurs who are in need of some money to bring their dream to reality.

The biggest benefit for many borrowers is that private lender's fund loan requests much more quickly than traditional lenders. Part of the reason banks are slow is that they require a huge amount of documentation to be sure that you have a good credit history and can afford the loan that is being requested. But private lenders are looking more at the value of the property that you are using to secure the loan. This asset-based lending principle means that creditworthiness is not as big an issue as the value of the collateral. In most cases, it is the property being purchased, but if the loan is to start up a business, then the collateral could be your personal home or other property that you own outright.

What private money lenders in Texas are looking for is a reliable deal. They are not in business to foreclose on properties and amass a portfolio of rentals. They are planning on taking a calculated risk to make a certain amount of profit in the form of interest. To ensure the success of their deal, lenders will want to see the contract for the property purchase, photos of the property and an executive summary of how you plan to be able to repay the loan.

What Private Lenders Have To Offer

You already know that private lenders will process a loan request much more quickly than a traditional lender, but there are other benefits as well. The private lender does not need to follow the same stringent processes as a traditional lender. This means that the terms of each loan can be customized to best meet the needs of the borrower. The length of time for a loan, the schedule for payments or even the options to refinance or pay the loan off early can all be negotiated with a private money lender.

Great Benefits At A Cost

Private money lenders in Texas offer many services that are not possible when financing through a traditional lender. The speed and convenience of private lenders cannot be achieved by any bank or mortgage company. And the ability to secure the loan with collateral rather than a credit score is also a benefit to many borrowers. But these services and benefits do come at a slightly higher rate than a traditional loan. Knowing the facts about private loans and hard money can help you to make the best choice to meet 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.

The Advantages of Private Money Lenders

(No all lenders understand what private money lenders in Texas do and how their services can be beneficial. But with a basic understanding of the benefits, it is clear why some borrowers choose a private lender.)

The hard cold truth is that not all borrowers can qualify for a traditional loan after the housing bubble burst, creating havoc for many homeowners. But those with poor credit, a foreclosure or bankruptcy in their credit history do have an alternative when they need to borrow money. Private lenders do not base their approval of a loan request on creditworthiness, as traditional lenders do. A private lender is more interested in the value of the collateral that is going to be used for the loan. This asset-based lending works in the favor of anyone with credit issues.

Another benefit of private money lenders in Texas is the speed at which they can evaluate, approve and fund a request. Traditional loans can take weeks or even months to process which can mean that someone else gets the house that you wanted. This issue of time is also very important to real estate investors who need to move very quickly when they find a good deal. Many private lenders will provide loans on a regular basis to investors who know that fast is the key to a successful loan and investment purchase.

All borrowers who use private lenders benefit from the more streamlined process of od applying for and processing these loans. There is far less paperwork required on the part of the borrower so applying is far less stressful. And with less information, the lender can evaluate the request more quickly and provide an answer and many time funding in just days rather than weeks or months.

Working With a Person

When you apply for a loan at a bank, you have a point of contact but that person has little or nothing to do with the approval of your loan. But when you are working with private money lenders in Texas you actually meet and talk to the person who will make the decision in most cases. This can be helpful when you are learning the process, or when you would like to customize the terms of your loan. Things like the loan term, the payment schedule and even some of the fees are up to the discretion of the lender that you are working with.

Personal Service

Private money lenders in Texas are simply another option for borrowing money when a traditional bank or mortgage company does not meet your needs. They are in business to make money by lending money just as banks and mortgage companies do but in a more personal manner. The loans can be customized to terms that are more satisfactory to you as the borrower and to the lender. The cost of this personal service is a little bit higher interest rate, but many borrowers feel that this higher cost is well worth it for personalized service and favorable loan terms.

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.

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.