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Private vs. Hard money lenders: The Differences

page3-img2You may wish to finance your next investment property, but find yourself a bit confused about the differences between private and Phoenix hard money lenders. This article will attempt to clear up some of this confusion and some common misconceptions, so you can get a clear perspective and find the help thats right for you.

Some consider private money and hard money lenders essentially the same thing.  But there are a few fundamental differences you of which you should be aware. It all comes down to the criteria these lenders use to evaluate borrowers, and these considerations can impact the type of deal you can secure.

The main difference between these two types of lenders is how they evaluate individual borrowers. Private lenders might consider all three C’s of lending (credit, capacity, and collateral).  Hard money providers generally only consider the value of the collateral on offer.

Therefore, private lenders may put scrutiny on aspects of your financial history such as your credit score. A private lender may also want to get a sense of your capacity or your ability to repay your loan. They might look into your financial history to ensure your income is sufficient to carry your current debts, usually  this measurement is expressed as a debt to income ratio (DTI). If your credit score or DTI doesn’t meet the private lender’s criteria, you may not qualify.

In contrast, hard money providers mainly look at the value of the collateral on offer, i.e., the value or potential value of the property you aim to finance. However because collateral is the primary consideration in the case of hard money there are some misconceptions when it comes to this type of lending.

The main complaint about Phoenix hard money lenders is that they are less willing to work with borrowers

Because hard money providers mainly look at the collateral offered by the borrower, they assume a higher risk. Because of this assumed risk hard money is often more expensive than private money. 

However, some assume that hard money providers are less flexible than their private counterparts. Because this type of lender only looks at collateral, they might have less confidence in a borrowers ability to repay. Therefore, if a  borrower meets turbulent fiscal headwinds, many assume it’s in a hard money providers best interest to foreclose on the property and resell it at a profit.

But this is a flawed assumption; because any reputable lender wants their borrower to succeed.

Foreclosure is a hassle, and no one wants to deal with it. So don’t assume your hard money provider won’t work with you if you run into financial difficulties.

Arizona Private Money Lenders may offer a better deal, but fewer borrowers may be eligible.

Going the private money route can result in a better deal.  Because most private money providers look into your credit and your capacity to repay,  and therefore they have more confidence in you as a borrower.

This confidence on the part of the private lender could give you the leverage to negotiate a better deal.

While private money may potentially be cheaper,  it may also be less convenient. You may not qualify according to the standards of an individual lender. In addition, underwriting your loan could take a long time, and this application process could cause you to miss out on your investment opportunity.

But there are no hard and fast rules in the case of either private money or hard money, as every individual lender is different.

Just know that the primary difference is that private lenders may consider( may being the operative word here), all three C’s of lending before approving an application, while hard money providers only consider the collateral on offer.

Private lenders might be able to offer cheaper loans, but the application process might also be less convenient when compared with their hard money counterparts. It is a catch 22. Private money might be less expensive but also less convenient. Hard money might be more convenient but it also might be more expensive. 

However, don’t make assumptions, every private or hard money lender is different. Ask any lender you approach about how they evaluate individual borrowers to see what type of deal you might be able to negotiate.

Dennis DahlbeDennis Dahlber Broker Ri CEO Level 4 Funding LLCrg
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.© 2016 Level 4 Funding LLC. All Rights Reserved.
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3 Ways to Risk Less with Hard Money Lenders Arizona Financial Experts Trust

Arizona hard money loans are private money loans funded by hard money lenders Arizona buyers make the most of for different financing choices. The loans are given primarily to actual property buyers to buy properties they intend to use as a method to make money. The lender makes curiosity and earns their principal again and the borrower makes a revenue on a wise funding. There are much less rules and loads much less paperwork than conventional loans and also you private funds do not matter almost as a lot as they’d on the financial institution. Sounds nice, proper? Effectively, hard money loans are a good way to make money and are a comparatively protected funding. However, any funding has some danger. Listed below are 3 methods to danger much less in your Arizona hard money loan.

  1. Select hard money lenders Arizona correctly. Not all funding companies or mortgage brokers are created equal. There are folks on the market who simply need to rip-off you out of curiosity. Search for a licensed broker or fairness agency to fund your funding. Be certain that your loan officer is educated about different funding and particularly hard money loans Arizona.
  2. Ask a lot of questions. Ask about rates of interest, loan to worth ratios, time frames, and every other issues that you could have. Your hard money lenders Arizona ought to have the opportunity to reply your entire questions intimately and provide the peace of thoughts you want to go ahead with the funding. For those who really feel not sure, maintain asking or purchasing round for a brand new lender till you’re assured.
  3. Do your homework. Earlier than buying any property just be sure you have a plan. Get the house inspected and appraised. Do not forget that location issues and check out not to overspend on repairs. Have a finances and timeline labored out earlier than you start your mission. Not solely will this just be sure you make a wise funding, however it would additionally impress your hard money lenders Arizona that you’ve got a strong sport plan in place. This can make it extra possible that you’ll get the hard money loans Arizona that you simply want.
After getting your loan in place, there may be nonetheless one main danger with Arizona hard money loans. They’re addicting! After getting a style of fixing and flipping a property, there’s a enormous danger you will not have the opportunity to get sufficient and can maintain doing it. However relaxation assured whether or not your actual property funding is a one time factor, or a method to make regular earnings, hard money lenders Arizona shall be there whenever you want them!


Dennis Dahlberg Dealer/RI/CEO/MLO

Stage 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Arizona Tel:      (512) 516-1177 

NMLS 1057378 | AZMB 0923961 | MLO 1057378

23335 N 18th Drive Suite 120 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Arizona | 78701

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Concerning the creator: Dennis has been working in the actual property trade in some capability for the final 40 years. He bought his first property when he was simply 18 years previous. He shortly discovered concerning the superb funding alternatives offered by trust deed investing and hard money loans. His need to assist others make money in actual property investing led him to specialise in different funding for actual property buyers who might have bother getting a conventional financial institution loan. Dennis is enthusiastic about different funding sources and sharing his data with others to assist make their desires come true.

Dennis has been married to his fantastic spouse for 38 years. They’ve 2 stunning daughters 4 superb grandchildren. Dennis has been an Arizona resident for the previous 32 years.


Make Full-Time Money Flipping Houses With Private Money Lenders Arizona!

Actual property flipping isn’t only a job – it’s a ardour by Private money lenders Arizona

Similar to with any enterprise, financial institution or mortgage firm, private money lenders Arizona wish to see that you just’re excited about a selected undertaking. At all times return calls promptly and get the knowledge they want in a well timed method. Private lenders maintain much less capital readily available than banks. When you delay in getting again to a hard money lender, they could lend their property to a different borrower.

Private money lenders Arizona specialise in hard money, asset based mostly loans. These are brief time period loans designed to get money into your arms rapidly for a brief time period repair and flip undertaking.

Step one to being the primary in line to get permitted for one in all these loans is to so a deep, penetrating curiosity within the undertaking. Allow them to know you’re not simply in it for the money. You don’t wish to simply renovate an outdated nursing residence, you wish to give it a contemporary really feel and ensure the group at giant is ready for such an excellent profit to the realm.


And if it seems to be some sort of charitable act that can make the world at giant a greater place, they’ll be all of the extra prepared to hitch your group and fund your undertaking. In spite of everything, everybody likes to really feel like they’re performing some good on the planet.
Additionally, don’t neglect to do some homework. Make certain you already know the potential property in and out, together with however not restricted to speaking to contractors and getting estimates on prices and repairs. You’ll actually present them what it’s all about if you happen to’re passionate and educated. 


Dennis Dahlberg


Stage 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Arizona Tel:     (512) 516-1177 



NMLS 1057378 | AZMB 0923961 | MLO 1057378

23335 N 18th Drive Suite 120

Phoenix AZ 85027

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