Arizona Hard Money Loan are becoming more common and mainstream than ever before. Thanks to television shows and some great articles online, borrowers now know that these loans are legitimate and are also a great option for certain real estate deals. The benefits of borrowing from an individual vary but can include a very fast turnaround time, very few documents required for the application and even the ability to negotiate the terms of the loan. And the one greatest selling point for many borrowers is that these loans are asset-based so borrowers with bad credit or no credit history can qualify.
But for all of the great features of Arizona Hard Money Loan, it is important that borrowers go into the process with a complete understanding of the process. Being asset-based, the lender is going to determine the amount he or she is willing to offer the borrower based on the current market value of the property. With the property value from a current appraisal, the lender then applies a percentage called an LTV, loan to value, to determine the loan amount. In most cases, the lender will offer between 70% and 80% of the value of the property. This is very important for borrowers to understand, as they need to have the remaining funds I cash to meet the actual purchase price of the property.
In addition to having the money needed to reach the purchase amount, borrowers will need to have the money to cover any upfront fees such as appraisals, application fees or funding fees. So while the application process is relatively stress-free and funding is fast, Arizona Hard Money Loan can require the borrower to have a large amount of cash to make the actual purchase of the property.
A traditional bank loan or mortgage is almost always going to offer a better interest rate than a private loan. In some cases, the hard money lender will charge 15% interest or more if there appears to be a great deal of risk associated with the project. But if you are unable to get a traditional loan, then paying a higher rate is worth it to make the purchase. In some cases, borrowers will secure hard money for an initial purchase and then work to get a traditional loan after some improvements are made and the property value has increased.
The other factor that can make it difficult to repay a hard money loan is the fact that the length of time for repayment is very short. Having even a few issues which can throw off a renovation schedule and increase the length of time that you are carrying the house as well as the hard money payments and interest. So it is always important to work diligently to remain on schedule. But, the bottom line is that used properly, hard money is a great way to finance some real estate purchases.
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.