Securing loans from Arizona Hard Money Lenders is not like getting a loan from a bank. Knowing what these lenders are looking for is critical to a borrowers success.
There are numerous benefits to hard money loans, but unless borrowers are aware of the five main criteria that Arizona Hard Money Lenders are looking for, they will miss out on these great loan opportunities. A simple application process is definitely one of the biggest benefits to hard money, but lenders still will require some information and documentation to approve a loan.
Even though Arizona Hard Money Lenders base a large part of the decision on the value of the collateral, there is still some interest in the financial health of the borrower. Lenders are not really worried about the borrower’s credit score as much as they are interested in the borrower’s ability to make the payments on the loan and to pay the carrying costs of the property. Most lenders will ask to see two year’s tax returns to verify income. The tax returns are a good way to see overall income and that also benefits any investors who are self-employed and do not have check stubs or a w2. In addition, most lenders will ask for a personal financial statement to evaluate the borrower’s debt to income ratio. Again, having the ability to make the payments is all that the lender cares about.
The value of the property is a major concern and consideration for lenders. They want to see that the property holds the potential for a good resale that will turn a profit for the borrower. Again, this is a security measure for the lender and assures that he or she will get repaid. Along these lines, it is also important to note that most lenders who offer hard money will require that they are the first lien holder to ensure that they get repaid.
Borrowers Need Experience
An experienced borrower represents a lower risk that someone who has never flipped and investment property before. Lenders are willing to take a certain amount of risk for a set level of profit. But if the borrower has no experience, then the level of risk increases, as does the interest rates and the likelihood of a default on the loan. Lenders don’t want the hassle of trying to sell a property to recover their money. They want payments on time and easy interest. So having an experienced borrower is a huge advantage and one that will secure a hard money loan.
Professionalism Counts Too
As with any business transaction, professionalism is a clear benefit. Lenders are looking for borrowers who are well prepared and have their documentation ready when they submit a loan request. Documents such as LLC organizational documents, lists of previous purchases and completed projects, plans for the current project and a timeline and exit strategy will all demonstrate that the borrower is experienced in the process and knows how to get a project completed on time and on budget. Meeting these five main criteria will all but guarantee that Arizona Hard Money Lenders are going to be eager to fund your request for hard money.
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.