Qualifying for traditional loans is not always easy—but is seeking out private, untraditional lenders really what’s best for you?
Tori and Tony wanted to learn to fix and flip houses, but they couldn’t qualify for a traditional loan. Their local bank and credit unions all said the same thing: their credit score was too low, and their debt to income ratio wasn’t low enough. Still, they didn’t want to give up their dreams of renovating a fixer upper, and decided to look into private money lenders.
Tori and Tony soon learned that private money lenders are untraditional options, usually private companies or investors, that offer hard money. Arizona Hard Money Lenders are often referred to borrowers who cannot qualify for traditional lending options. While they can be really helpful for borrowers in some situations, they may not be for everyone.
Finding Success Within the Eligibility of Hard Money
Hard money is great because, when you are approved, you can obtain it fast. Some Arizona Hard Money Lenders are able to begin the loan process within the week, if not as soon as the day of. Traditional lenders like banks may take as long as a month. Depending on why you need the cash and how fast, the ability to obtain a loan may make or break you. In Tori and Tony’s case, they wanted to purchase a property with high renovation potential. Because it was such a great piece of property on the housing market, they felt the need to secure the loan fast. However, there are a few daunting things about hard money to consider. The first is the high interest rates. Interest on hard money loans can be as high as five percent higher than other loan options. Additionally, there is a short repayment period. Depending on what you plan with your loan, this could be a good or a bad thing. Because Tori and Tony were wanting to renovate a home and sell it quickly with hopeful plans for profit, a hard money loan would be great. The short repayment period falls in line with the timeline of a fixer upper. In other cases, like using the loan for a rental property where money is coming in over a long period of time, hard money loans may not be right for you and your situation—especially coupled with the high interest rates.
Are Arizona Hard Money Lenders Right for You?
Determining if you should seek out hard money, is a decision that should be made based on your individual needs. Just because Tori and Tony were seeking out a private lender for a fix and flip doesn’t mean that that is a decision you will want to make too—no matter how common it is for private lenders to invest in fixer uppers. Ultimately you will want to consider your major limits in regard to money and time. If you meet with a private lender and are still unsure about whether it is the right decision for you, you can always meet with a real estate attorney. A real estate attorney will be able to help you identify any major stipulations with the loan agreement, and advise you of any concerns or possible risks. Not only that, but they can help provide insight on the legitimacy of the lender. Something always to consider is the lender’s reliability. When it comes to loans, it’s not only the borrower who has something to prove: it’s the lender, too.
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.