It isn’t always easy to spot a loan scam, but if you pay attention you will see the signs. Scam artists’ intention is to take full advantage of their victims; taking everything they can from them and even selling their personal information. Protect yourself and your finances by being aware of the following red flags.
1. GUARANTEED APPROVAL—You’ve gotten a “You’re Approved” letter in the mail from a credit card or a car dealership—that’s different that what is being discussed in this article. When you get those pre-approval letters in the mail, that is usually a legitimate business trying to get you to attempt to get qualified. Even though Arizona Hard Money Lenders are much more flexible than conventional institutions they still will not guarantee your approval without reviewing your credit history and assessing the risk they may be taking. If a lender tells you that you are approved without going through the approval process—walk away. Legitimate establishments want to know their money will be paid back.
2. SUSPICIOUS WEBSITE—The first thing you should do, when searching for a hard money loan is research—google your city and Arizona Hard Money Lender. Most likely, the first search you will come across is their website. Take time looking through their site. Reputable lenders have the financial capabilities to have a nice website—do they give information about various loans? Does their email address match their domain? Are there examples of their investments? All in all—do they have a professional online presence?
3. THEY ASK FOR MONEY UPFRONT— This is the most obvious sign of a loan scam. I’m sure you, or someone you know, has received the call saying they are the IRS and if you don’t wire them X amount of money they will arrest you. As silly as it may seem—many people have fallen for that exact scam. In 2017, American’s were defrauded of $905 million. Typically, in this type of scam, the scam artist will explain that this upfront money is for an application fee, processing fee or deposit—without even speaking to you about how the loan process works. Now, this is not to say that an application fee, credit report or appraisal is not required. Many Arizona Hard Money Lenders require an application fee—the same as an application fee required to rent an apartment. However, if they begin by asking for hundreds of dollars before you have seen anything—run for the hills. In legitimate transactions most fees are rolled into the total of the loan.
4. PROMISING YOU AN UNSECURED LOAN— Arizona Hard Money Lenders can be flexible on credit scores because they use property as collateral in case of default. However, your property is what is securing the loan. If a lender tells you they will give you a loan with little or no collateral, which is an unsecured loan, they are up to something. No legitimate lender would take a risk of a borrower defaulting on a loan and having nothing left to recover the costs. Unsecured loans do not happen with Arizona Hard Money Lenders—nor, do they happen with any legitimate financial institution.
The bottom line is you will find scam artists anywhere money is involved. There are so many red flags when shady lenders are involved. If you have questions about hard money lending, please visit our website level4funding.com.
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.