Beretta Only

Wednesday, March 20, 2019

Qualifications for Arizona Hard Money Loans

(If you have never used a hard money lender, then you will not understand the qualifications that are required. But following these tips can help you to secure Arizona Hard Money Loans.)

As compares to traditional loans, Arizona Hard Money Loans are very easy to qualify for. But there are certain things that a lender will look for when deciding if he or she will fund a loan and also the interest rate that will be charged for the loan. The primary concern is the value of the collateral property, but there is also some concern with regards to the experience of the borrower and knowledge of the real estate industry.

It might seem odd, but money is a major concern even when you are asking to borrow money. The lender will need to be sure that the borrower has the money to make the down payment which could be as much as 25% to 35% of the cost of the property. In the case of a commercial property purchase, the down payment could even be 40% of the cost of the property. In addition, the lender will want to know that the borrower has a cash reserve to fall back on in the event of an unforeseen issue.

Submitting the borrower's track record of successful projects is a great way to offer the lender some security in the borrower's experience and knowledge. It is important that past deals have been completed on time and on budget. This will help to keep the interest rates down as there is less possibility of a default on the loan. Being new to real estate investing will not preclude a borrower from securing a loan, but it should be expected that the lender will charge a higher interest rate and could require more documentation to demonstrate a well-conceived plan for the project.

Exit Strategy

Finally, the lender will want to see an exit strategy for the project. This is a detailed plan showing the borrowers plan for repaying the hard money loan. The short term of Arizona Hard Money Loans can make it very challenging to repay them on time. Borrowers need to have a solid plan to finish the project to make the final payment, or balloon payment, that is normally the close of a hard money loan. The exit strategy will also include contingency plans in the event of time overrun or budget overrun. Normally, it is the borrower’s cash reserve that is tapped to correct these issues.

Final Approval

Hard money loans are not as complex as they might initially appear. The lender simply wants to access the risk involved in the loan and to know that the property will have enough value to cover any outstanding balance on the loan should the borrower default. The information about work experience and past project experience is used more for determining the interest rate for the loan and the fees that will be involved in writing the loan. It is also important to understand that after completing several loans with a lender, the process can become even more streamlined and fast as you have developed a strong working relationship with the lender.

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.

Who Should Use Arizona Hard Money Loans?

(Arizona Hard Money Loans are not right for everyone. But for real estate investors and consumers with credit challenges, hard money is a great option.)

Arizona Hard Money Loans are a short termed, asset-based loan that holds some very special benefits for the right borrower and the right projects. For the most part, the loans are used for real estate purchases because it is the real estate that becomes the collateral for the loan. A borrower could request a hard money loan for another purpose, but he or she would need to own a property outright to use as collateral for the loan. This is not unheard of but it is unusual.

In most cases, the borrower on Arizona Hard Money Loans is involved in real estate investing. New real estate investors like hard money because the value of the property is enough to secure the loan. It is also not dependent on a long credit history which is good for a younger investor who might not have a lengthy credit background. More seasoned real estate investors will also use hard money, but more for the easy qualification as much as the fast funding time. A hard money lender will normally find a loan in a few days rather than the month or two that it can take to get a loan from a traditional bank or mortgage company.

Still, other real estate investors will elect to use a hard money loan because it is far less stressful than the long loan application process required by traditional lenders. There is little sense in investing all of that time in an application when you only need the money for a few months. And many sellers will look upon the hard money loan favorably when there are multiple offers in on a single property.

The Credit Challenged

There are many people who have been turned down for a loan at a traditional bank or mortgage company. The reasons can range from bad credit to no credit, but the end result is that they can’t get traditional financing. These borrowers then turn to a non-traditional lender for hard money. In most cases, they will use the hard money for a short time until they can find a way to secure a traditional loan to pay off the hard money loan. This allows the borrower to extend the payment term to the length of a normal mortgage and often lower the monthly payment.

Why Arizona Hard Money Loans?

There are many benefits to hard money such as fast funding and the easy application process. Different borrowers have different reasons or motivations for selecting hard money. But in the end, borrowers are willing to pay more to use hard money because of the convenience that it offers to them. And even in cases where the borrower is somewhat risky, the lenders are willing to extend the loans due to the potential to earn more interest on a high-risk loan. Both the borrower and the lender are providing something that the other needs, and the loan works out to be mutually beneficial to both parties involved.

The Best Types of Deals For Arizona Hard Money Loans

(If you understand Arizona Hard Money Loans, then you will know how to best use them. Some deals are tailor-made for hard money.)

Arizona Hard Money Loans can be a great tool for many investors and investments, but these are not a one size fits all type of loan. It is important to know what types of deals work best with Arizona Hard Money Loans so that you have the greatest potential of a high return on your investment. The following real estate deals are perfect for hard money due to the time frame or other parameters that are best suited for these asset-based loans.

Fix and flip projects are often very time sensitive. And that time crunch usually begins the moment that you learn of a great property. Private lenders are known for fast turnaround times on loan requests which are a must to secure a property that has great potential for a high ROI. This means that you can request a loan, get approved and have the cash in hand before a traditional lender will even have approval or denial ready for you. Land loans are also hard to get a loan for, as they have questionable value. But a hard money lender will provide the money for the land and the construction on the land so that you can then secure a mortgage on the improved property.

Construction loans are difficult for the same reason that land loans are a challenge. Most traditional lenders don’t want to take the risk on something that is not tangible yet. But Texas Hard Money Lenders are in business to profit from that high risk. Hard money will provide you the funds to purchase materials and pay construction cost. Then when the project is completed, you can qualify for a traditional loan and pay off the hard money loan.

Credit Issues

Arizona Hard Money Loans are great for borrowers who have bad credit as well. The loan approval is based on the value of the property being used as collateral for the loan, so the bad personal credit is not such a big issue. If the property holds value and the borrower has the ability to make the loan payments, then a hard money lender is going to make the loan. It is important to understand though, that really, really bad credit will mean that your interest rate is higher due to the added risk that you could default on the loan.

Many People Use Hard Money

Clearly, there are a great many people who benefit from hard money and from the services offered by hard money lenders. It could be a new real estate investor who needs a first loan or a seasoned professional real estate investor who needs fast funding to secure a great property. Or in other cases, it is just a consumer who has bad credit but is ready to purchase a home. What is important is that the lender understands the loan and the terms to make the payments and fulfill his or her responsibility.

Tuesday, March 19, 2019

The Benefits of Arizona Hard Money Loans

(Arizona Hard Money Loans are not for everyone. But they do offer many benefits to the right borrower.)

There can be a great deal to learn the first time that you are in search of a loan. And it is critical that you invest the time to doing some good research to ensure that you made a smart selection. If you rush into the first loan that is offered to you, there is a good chance that you could be losing a lot of money or getting yourself into a loan agreement that you don’t understand and cannot fulfill. Knowing the benefits of Arizona Hard Money Loans will help you to determine if this loan is a good match for your current needs.

Nothing in life is free, and that includes Arizona Hard Money Loans. Many potential borrowers look at the interest paid on a hard money loan as the greatest drawback, but the smart borrowers know that this is just the cost of such a convenient loan. Private lenders are not limited to the interest rate that they can charge so you will want to verify the interest rate with each lender that you speak to. But you need to understand that charging interest is how Texas Hard Money Lenders earn their living. Some rates will be a few points above the rate of a traditional lender, while other lenders who are willing to assume a great risk will charge in excess of 10%.

There is no way that a borrower will ever see the turnaround time of a hard money loan as anything but a fantastic benefit. Unlike banks that can take weeks or even months to process a loan request, most Texas Hard Money Lenders will process a request in just a few days. That short time period makes hard money a great choice for a very time sensitive loan.

A Loan With Fewer Requirements

When you apply for a loan from a bank, there is literally a huge pile of documents that you need to submit for review. They could request copies of your paycheck stubs, your tax returns, your bank statements and even documents regarding your business. But a hard money lender is going to be far more interested in the value of the property that will be used as the collateral for the loan. You will need to show proof of your income but there is no deep dive into your credit history and credit score to secure a hard money loan.

The Details are Critical

As with any loan, Arizona Hard Money Loans offer benefits and drawbacks. But if you have read the entire loan document, then you clearly know the total cost of the loan and all of the expectations that you must live up to during the repayment process of the loan. It is only when a borrower fails to read the terms and just signs the loan agreement that trouble begins. Investing some time in learning about hard money and then fully understanding all of the terms of your loan options will allow you to make the choice that best fits your current needs and is the most affordable.

What Are Hard Money Lenders?

(If you are looking for alternative finance options, then you are certainly going to want to understand what hard money lenders are and what they have to offer. It could be the answer you are searching for.)

To understand who Texas Hard Money Lenders are, you first need to understand what hard money is. Hard money has nothing to do with how difficult it was to earn. Hard money is a type of short-term loan that is secured by the property that is being purchased. Also called asset-based lending, these loans offer many benefits as they do not rely so heavily on an individual’s credit score. And while many borrowers look at Arizona Hard Money Loans as a less than legitimate loan or something of a questionable nature or legality, these loans are perfectly legal.

Texas Hard Money Lenders are private individuals or private groups who offer these loans to borrowers. The lenders are in business to make money, and they choose to do it by offering loans based on the value of the collateral rather than the borrower's creditworthiness. And because they are offering a service that is less challenging to qualify for, these lenders know that they can charge a higher interest rate than a traditional bank or mortgage company.

When you speak of hard money and soft money, it can be a little bit confusing. But hard money is used for traditional purchases like a car which gives you many years to pay the loan back. Hard money is a short-term loan, meaning that you normally must pay the money back in about one year. So this would not be a favorable term for a car loan. But it does work very well for a fix and flip investment property purchase, or even a renovation to your personal home before refinancing your house and paying off the private loan.

The Most Common Uses For Hard Money

As we previously mentioned, the key to a hard money loan is the short term of the loan. So these loans are great for investments or projects which will be completed in a year or less. One of the more popular uses in the past few years is for house flipping. These loans fund quickly and allow investors to pay for the property and the renovation from one loan. Property development is another common use for Arizona Hard Money Loans as the projects normally fall within the one-year time frame. And personal loans that are needed to make home repairs or to consolidate bills could fall into the realm of a hard money loan.

Working With Hard Money Lenders

What is important to understand is that a hard money lender is just like any other business person. He or she is interested in loaning money to earn a profit on the interest. In addition, the lender is likely to work with the borrower on terms and conditions in order to close the deal. If you are new to hard money, it is best to simply be honest with the lender ask any questions that you might have about the process so that you are both comfortable with the agreement and the outcome of the loan.

Pros and Cons of Arizona Hard Money Loans

(Even though it is often an expensive loan, there are many benefits of Arizona Hard Money Loans. But there can be a few drawbacks as well.)

There are many reasons that a borrower will begin to expand his or her search beyond the realm of traditional lenders. And for many borrowers, Arizona Hard Money Loans are an option that works for their special needs or with the credit challenges that they are facing. But before you decide that hard money is the way for you to go on your next loan, you should be well aware of the benefits and drawbacks of these asset-based loans.

Because hard money lenders focus on the value of the property being used as collateral, and less on the borrower's personal credit, the time required to process a request for hard money is far shorter than a traditional bank loan. This speed is a definite benefit for borrowers who are hoping to invest in a bargain property that they have just discovered. In many cases, real estate investors will regularly work with a hard money lender and have a very strong relationship that provides greatly expedited funding on many loans. It is well worth the added cost of hard money when you know that you can have the money in just a few days rather than a few months.

Traditional lenders offer very limited terms to their borrowers. And because most banks are very large and have hundreds of thousands of customers, they are not willing to work with a borrower to customize the terms of his or her loan. But a private lender does not serve nearly as many loans so he or she must work with the borrowers to create mutually beneficial loan terms. This flexibility is a great benefit when you are looking for a very short term loan or need to structure the payments in a very specific manner.

Securing Arizona Hard Money Loans

Because the approval process is based on the value of the collateral property, borrowers with poor credit or no credit can often secure Arizona Hard Money Loans when traditional lenders reject their loan request. And even at a higher interest rate and with higher fees, hard money is a much better alternative than no loan. So consumers with bad credit are often eager to use these lenders.

Understanding the Drawbacks

Now that you know all of the benefits of hard money, it is important that you remember that the biggest drawback can be the cost of the loan. In some cases, the lender will charge up to 10% in interest and fees. And another negative aspect of these loans is that many borrowers will fail to read and understand the terms of the loan before signing the agreement. Even though you might think that all loan documents are alike, that is not the case. A private lender can include any clause that he or she chooses to add and you must follow the agreement if you have already signed the document. It can be very helpful to have a legal specialist review any loan agreement if you are not familiar with private loans.