The Upsides of Arizona Hard Money Loans
Many people view Arizona hard money loans
as a “last resort,” and tend to avoid them because of the negative connotation associated with them. The have developed this reputation because most borrowers who utilize these services have bad or limited credit and cannot be approved by a bank or other money lender. That usually means that they also tend to have higher interest rates than traditional loans, thus making borrowers wary.
However, there are more upsides to Arizona hard money loans than there are downsides. For example, Arizona hard money lenders will go where traditional money lenders won’t. They will trust a borrower who has poor credit (or no credit at all), without asking for employment history or minimum income requirements. In fact, Arizona hard money loans are equity-based, so they are more dependent on the property value than they are on any of your information. Arizona hard money loans are an excellent option for short sales, purchasing foreclosed homes, and also fix-and-flip projects. They are a creative way for both the borrower and the lender to benefit.
Often times, lenders will lend up to 80% of the home value. In most cases though, this number is usually at least at 65%. The loans tend to be shorter than traditional bank loans, normally ranging anywhere from 6-36 months.
Getting Approved for an Arizona Hard Money Loans
Eligibility for Arizona hard money loans couldn’t be easier to obtain. Since the loan is not based on the borrower’s credit or other personal financial data, those items are never taken into account. Hard money loans are based solely on the appraised value of the property, or the LTV (Loan to Value) ratio.
Still, it is important to maintain a professional persona when seeking approval for an Arizona hard money loan. When consulting with a lender, be professional in dress and manner, have as much information on the property as possible, and a plan of action that you plan to use in repaying the loan. Be sure to make a document containing all expenses and plans for the hard money loan. It couldn’t hurt to include photographs of the home as well.
Sometimes, Arizona hard money loans are referred to as “bridge loans,” meaning that they are necessary for short-term financing needs. Because the risk taken on the lender’s part is significantly higher than traditional banks (because they are not looking at the borrower’s ability to pay), interest rates tend to be a bit higher.