Arizona Hard Money Loans are a great financial tool for funding a fix and flip project, a new construction, a move to a new house prior to the sale of your current house or even a new business startup. But even with the streamlined application and approval process of hard money, having a few tips when preparing for your loan application can provide a great deal of peace of mind.
It might seem odd at first, but being liquid when you are asking for a loan is very helpful. Obviously, you do not have the money saved to make the purchase of the property, but it is important that you have money available for contingencies such as additional damage or repairs needed or a time overrun causing you to carry the loan for longer than expected. In addition, this cash will be needed to make the down payment and pay any upfront costs for the loan such as appraisal fees.
It is also important that you understand that private lenders are going to charge a higher interest rate than a traditional lender. Knowing this can help to avoid a surprise as you review the loan offer. In addition, as you prepare to seek hard money, you should know that even though a high credit score is not mandatory, it can help you get a better interest rate. Lenders view a higher credit score as a more financially responsible borrower and as such, they represent a lower risk and are rewarded with lower interest rates.
The loan to value ratio is what will determine how much money you can receive when requesting Hard Money Loans in Texas. Basically, this means that the loan is only going to be for a specified percentage of the value of the collateral. Most lenders will offer a 70% LTV but others will go as high as 80%. Your credit score and cash reserve can be a factor in this determination as well. Most lenders are open to some negotiation in this area when the borrower demonstrated stale finances.
Having an exit strategy is also an important step in the planning phase. This is basically how you plan to get the money to repay the loan. Your first choice would be to sell the property when the renovation is completed. But in the event that it does not sell quickly, it is wise to have a backup plan such as renting the property until it sells or offering a rent to own. And finally, don’t limit your options to a single lender. It is always smart to have a few choices when selecting any service provider. Arizona Hard Money Loans are simply a tool that is being provided by a service provider, a lender, and should be compared to ensure that you get the best value.
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.