Hard money is a resource that many borrowers are unfamiliar with or they might even have some incorrect information which is causing them to misunderstand the loan and its value. Borrowers have been lead to believe that Hard Money Loans in Arizona are something similar to the money one would get when dealing with a loan shark or some other unsavory character. But that image could not be further from the truth. Hard Money Loans in Arizona are referred to as nontraditional loans simply because the lender is an individual or a small group and not a traditional bank or mortgage company.
As noted before, hard money is provided by a private lender which is one of the biggest pros for many borrowers. The private lender can review a loan request or application much more quickly than a traditional lender. In addition, private lenders are much more likely to create tailored loan terms than a bank or a mortgage company. These adjusted terms could include a unique repayment schedule, a longer period of time between payments or even the terms which define defaulting on the loan. But whatever you and the lender both agree to, can be the terms of your loan. All of these are very good reasons for borrowers to love using hard money.
As with any loan, it is important that you request a detailed breakdown of any costs associated with the loan, the repayment schedule and any other terms that apply to your loan. Even though the lender is private, the contract to borrow from him or her is still a legally binding document that you must follow once you have signed it.
While borrowers are very eager to work with a private lender as opposed to a traditional bank or mortgage company, there are a few drawbacks for all of the fast and easy processes of hard money. One major issue for some borrowers is the higher cost to use hard money. Most lenders are going to charge an interest rate at least 5 points higher than a traditional loan. In addition, the lender is able to charge other fees associated with the loan such as application fees, administrative costs, closing costs and funding costs. For this reason, it is critical that you get the total cost of the entire loan in writing to verify the cost of using the lender’s money. Another issue that can arise is when a lender is an individual or very small business, the customer service and communication can become more challenging. But these are the costs of using a private lender.
As with any loan or legal transaction, it is the borrower’s responsibility to read the entire document and understand all of the terms prior to signing it. It is also prudent to research the lender and to know as much about him or her as possible before signing any contracts. Hard Money Loans in Arizona are a smart financial tool when they are used correctly.
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
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.
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