You’ve heard the term “hard money.” But, what exactly is hard money? In simple terms, hard money is a loan that is secured by the borrower’s real estate from a non-traditional lender.
Arizona Hard Money Lenders play an indispensable role in financing a variety of real estate deals. Arizona Hard Money Lenders are private lenders that have money and lend to investors at a slightly higher interest rate. The lenders are not insured by the FDIC, as traditional lending institutions are. Therefore, they charge a higher interest rate in place of the void of insurance.
Compared to traditional banks, Arizona Hard Money Lenders not only have higher interest rates, but they have shorter terms. Arizona Hard Money Loans are for short-term use. The vast majority of these loans’ terms are between six months to a year—however, depending on the situation can often have a three to five year agreement.
What’s The Benefit Of An Arizona Hard Money Loan?
You may be asking yourself, “why would anyone use an Arizona Hard Money Loan when they can just as easily get a loan from the bank and receive lower interest rates?” Well, there are a plethora of reasons borrowers turn to Arizona Hard Money Lenders.
Arizona Hard Money Lenders can approve and fund a borrower much faster than a bank. It can take weeks and often months to be approved by a bank—and even after that, you can easily wait up to 90 days to close. An Arizona Hard Money Loan can be approved in as little as 24 hours and disperse funds in under 10 days.
The underwriting process is much more lenient because Arizona Hard Money Lenders do not have to follow federal guidelines. This speeds up the approval process; often a third party appraisal is not required to purchase the property.
Very few banks will touch a fix and flip property. Because these are homes that are distressed and will not be inhabited by the borrower the banks view these rehab projects as too risky. However, a fix and flip loan is a fantastic option for an Arizona Hard Money Lender to lend work with—fix and flip projects are very short-term making the loan terms of an Arizona Hard Money Loan valuable.
Banks rely heavily on the borrower’s credit score and income; whereas an Arizona Hard Money Lender’s focus is on the value of the property. The value of the property is what is backing an Arizona Hard Money Loan. The hard assets insure the lender will have their money returned. In case of default the Arizona Hard Money Lender can sell the property and make their money back.
The benefits of hard money are vast. For a borrower with good credit, employment and a high enough income looking to purchase their primary home an Arizona Hard Money Loan wouldn’t necessarily benefit them.
However, if a borrower needs money quickly to compete with cash buyers, if they are real estate investors or they need a chance to clean up their credit— an Arizona Hard Money Loan could aid them immensely. Hard money is not for everyone but, it is very useful for those borrowers in need.
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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.