How To Determine If Hard Money Will Work For You

Hard money loans are typically used by investors who need funding for an investment property quickly without the strict requirements of traditional mortgage lender financing. However, Hard Money Loans in Arizona can be used efficiently in other scenarios.

Essentially, hard money loans are short-term loans that provide financing to a borrower—these loans are secured by the borrower’s property. Texas Hard Money Lenders are private lenders. Because of this the hard money lender can be more flexible with their terms. Usually, these loans are right around a 12 month loan term. Typically, borrowers pursue Hard Money Loans in Arizona to finance their deal quickly or they want approval for a loan that wouldn’t be approved by a traditional lending institution.

Investors regularly use Hard Money Loans in Arizona for fix and flips. Banks will not approve fix and flip investments due to the risk they pose for repayment. A hard money lender will use the property as collateral and, in the case of default, they will repossess the property and sell it. A hard money loan can include not only the financing for the property, but can include the materials that will be required to refurbish the property. These loans are interest only loans throughout the life of the loan—the last payment is a balloon payment. Usually, within the 12 month period the borrower has renovated and sold the property—this allows the repayment of the loan and a profit for themselves. Texas Hard Money Lenders will work with a borrower when it comes to the term of the loan. A borrower may need more than 12 months— these loans are known to be extended out to three years and occasionally five years.

PROS AND CONS OF HARD MONEY LOANS

With a hard money loan the interest rate will be higher than a traditional mortgage. Many borrowers, when weighing the pros and cons of Hard Money Loans in Arizona, agree that the high interest rate is worth all the pros these loans give. Borrowers can be approved and receive funding in as little as a week to 10 days. This lightening fast process can secure property for investors that may easily lose properties due to the incredibly slow approval process of traditional banks. Texas Hard Money Lenders will also approve loans that traditional lending institutions will not. An example of this is a cannabis marijuana dispensary loan.

Many borrowers are not approved because of poor credit. Lenders want to know they will be paid back. Banks use a borrower’s credit score and income to asses risk of default. If a borrower has a clean credit report and makes enough income to meet the debt-to-income ratio they have a better chance of approval. However, Texas Hard Money Lenders look at assets— they base their decision on the value of the property. Usually, a borrower can receive a loan for 70% of the purchase price—however, many times 90%-100% of the purchase price can be financed.

Hard Money Loans in Arizona are often referred to as bridge loans. These loans bridge the borrower from an unconventional loan to a conventional loan. These loans can give the borrower time to clean up their credit, time to sell their property, time to handle whatever they need to handle in order to have convert to a traditional mortgage.

Yes, Hard Money Loans in Arizona have higher interest rates than conventional loans. Researching this subject thoroughly has shown that the high interest rate is truly the only negative that can be found.

And the truth of the matter is—a hard money lender is taking a large risk with these types of investments. Whether it is a single home property being fix and flipped or a construction loan being taken out for a house that hasn’t even been built yet. A hard money lender believes risk pays off. They believe and are involved in the investments they approve.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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

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.