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.
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.
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.
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.