In the past hard money lenders got a bad rap. Images of loan sharks arose in people’s minds, but that couldn’t be further from the truth.
Hard money financing is a tool that not only investors should keep in mind—but, people from all walks of life. The main benefits of using hard money are the speed and flexibility but there are many other reasons you should use hard money.
1. Hard Money Lenders Will Approve Lenders With Poor Credit— Income history and high credit scores are required when a bank approves a loan. And it is not only your credit and income that the bank must approve—it is a plethora of other criteria. Hard money lenders, on the other hand, primarily focus on the value of the property that serves as the collateral for the loan. If the lender is comfortable with the value of the property then they can be more lenient with the borrower’s income and credit. This can benefit investors, business owners and people needing a second chance when it comes to their credit.
2. You Can Negotiate a Lower Purchase Price With A Quick Close
Investors biggest competition is all cash buyers. Why? A seller wants to sell their property as fast as possible and with the least amount of hang-ups as possible. Unless an investor has cash saved, they need quick cash. Hard money loans typically close within two weeks which allows real estate investors to negotiate a lower purchase price with the promise of a short escrow and speedy closing of the loan. Sellers are more willing negotiate with a promise of a quick close.
3. Fast Approval and Funding
Hard money loans are simple and straightforward. Borrowers fill out a standard loan application that typically takes five to ten minutes. In most cases, the application will be approved within five minutes. When applying with a traditional lender you will fill out countless pages that take hours upon hours to fill out. It is not unusual to wait weeks to hear if you are even approved. Once, the approval happens you will go through a painful amount of additional forms and information the bank will need to fund your loan. Even after approval you will wait anywhere from 30 to 90 days to close on a conventional loan. During that time it is highly likely the property you wanted is long gone.
Because hard money lenders are individuals they make their own rules. Underwriting is the main reason conventional loans take so long to close. However, hard money loans have a very simple underwriting process; hence, you will receive your loan quickly. Hard money lenders are people—people that know their borrowers. Because these lenders are not mandated to be as strict with their underwriting process, they are able to work with the borrower to negotiate terms and repayment schedules.
5. A Borrower Can Obtain Financing for Additional Loans
Banks and credit unions cap the amount of loans an individual can take out at four. This can be difficult for an investor trying to get a head of the game. Hard money lenders do not enforce these caps. Their concern is the equity in the property. Most hard money lenders prefer working
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
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About: 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.
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