The traditional lenders such as a national lender, your local bank, credit union or local mortgage broker realize a majority of their business from underwriting consumer mortgages or loans on a primary residence. Several of the largest mortgage guarantors, Freddie Mac and Fannie May, guarantee mortgages for consumers in the United States. When a consumer applies for a residential mortgage, the traditional lenders need to follow the lending guidelines set by both Freddie Mac and Fanny May. As a result, the consumer mortgage market is highly regulated. Before the housing crisis in 2008, the underwriting standards were very loose, and many people received mortgages that they could not afford. So, after the crisis, the U.S. Government established new standards that tightened lending standards for consumer mortgages that lenders had to abide by. Some of the highlights of the new standards are demonstration of more income, more savings, and better credit. Due to this, it takes longer to get a loan and much more documentation.
There are several differences between conventional lenders and Arizona Hard Money Lenders. The main differences are: First, most Arizona Hard Money Lenders do not lend on residential residences (unless you seek out a hard money residential lender). These lenders tend to lend to borrowers who invest in properties looking to flip the property and make a profit. Since they lend to investors and businesses, the lenders are less regulated then consumer lending. Second: Arizona Hard Money Lenders do not sell their loans to a second party. The lenders either lend their own money or money from investors. They loan based on investment criteria such as their win risk tolerance and lending experience.
Third: Arizona Hard Money Loans are typically short term in nature, terms range from one year to five year where typical residential loans can run 20 or more years. The hard money loan needs to be repaid in full at the maturity of the loan or converted to a conventional loan. Fourth: There are borrowers of Arizona Hard Money Loans with low credit scores, dings on their credit, do show enough income, or are self-employed. Some borrowers carry too many mortgages currently to qualify for a conventional loan. Without Arizona Hard Money Lenders, these people have no choice but to not get involved in the fix and flip industry.
Fifth: Current conditions of a property are what a conventional lender looks at. Traditional lenders tend to avoid lending to rehabbers, though there are a few exceptions. Properties for conventional lenders must be livable right away. Arizona Hard Money Lenders look at property’s value after rehabbing of the property. Some of the expense for rehabbing can also be rolled into the hard money loan.
Sixth: Ability to compete with a cash offer: You have located a property and a cash offer comes in. You cannot compete with that offer unless you work with a hard money lender. The ability for the lender to act quickly is an advantage. A hard money loan could possibly close in as little as 3 days, have minimal paperwork, and the property you are seeking to acquire can act as the collateral. If you are looking to go the route of a hard money loan, then you will need to do your due diligence and research various lenders. Call us at Level 4 Funding for a no obligation quote.
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.