While a hard money loan can be more expensive than a traditional loan, the speed, flexibility and approval process can make the expense worth it. Learn more about the pros and cons of hard money loans and determine if it’s the right option for you.
A hard money loan is one funded by a private investor. Unlike traditional lenders, Arizona Hard Money Lenders are not concerned with an individual’s credit. Because of this, they are more likely to work with an individual rather than a bank or credit union who will reject appeals based on financial situations.
When lenders fund investments, they are focused on the property’s collateral. This means that they will be willing to lend the value of the property. Lenders, however, have higher interest rates that may range between 10 and 15 percent. If the desired property needs excess work, the interest rate of hard money loans may make them seem unreasonable. However, if the property is good and you are in a state to be able to repay the loan, speed, flexibility and approval are a few benefits that may outweigh the costs of interest.
Benefits of Borrowing from Untraditional Lenders
Typically, the process of receiving a loan is much faster when done with an untraditional lender. Oftentimes, this process can begin within the week or, sometimes, the same day. A traditional lender may take as long as a month or more. Speed for the borrower may be important if bids for obtaining property are competitive and it is necessary to act fast.
Flexibility is another selling point. Unlike traditional lenders, Money Lenders Arizona Hard work on an individual basis. Limitations imposed by banks and other traditional lenders are not as strict working with someone in this type of relationship. This means less concern over credit score and income history. Using an alternative lender leads to a more individualized process and more flexibility when considering finance history, and in general the approval rate is much higher. However, even with a higher acceptance rate, it is important to consider all terms within the process to know if it is really the best option for your situation.
How to Know if Alternative Options Are Right for You
Hard money loans are commonly borrowed for fixer uppers, by competing real estate agents, and to prevent foreclosure. While speed has its benefit in these scenarios, it also works in the reverse. Arizona Hard Money Lenders offer a shorter repayment period than traditional lenders. Coupled with the higher investment expense, it’s important to consider how quickly you will be able to repay the loan and develop a plan that will allow you to repay in the allotted time period.
Seeking an investor who offers hard money loans means looking in your area for real estate investors or real estate investor groups. Even conventional mortgage brokers may provide you with further information in seeking out someone who is right for you in your situation. While the expense may be intimidating at first, beginning a relationship with an untraditional lender may provide more benefits at second glance.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
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.