The first thing a potential investor needs to know is that working with hard money lenders versus banks will not only speed your closing dates up, it will allow you much more opportunity to work with sellers due to the no hassle, quick closing.
Hard money terms are typically from six to 36 months. The loan rates range from 7.5% to 15% and the points to close on the loan are generally from 3% to 10%. Hard money lenders have their own unique underwriting process that is not as rigid as conventional lender’s underwriting process. Rates and terms of loans will fluctuate throughout the year and each lender will have their own set rates and terms.
Because the underwriting is more flexible than traditional lenders, such as banks and credit unions, they are not forced to key in on an investor’s credit score and financial history. The hard money lender’s focus is primarily on the property which is the hard asset that is being used as collateral.
Typically, lenders use the following qualifications.
1) Three months of personal bank statements
2) FICO score of 550
3) List of any investment experience if applicable
4) Purchase contract for property
5) W-2’s from the last 3 years
Investors with experience will typically receive lower interest rates due to their proven track record. The longer an investor is in the game the more money they can make and save.
Hard money lenders typically have a standard application process. It doesn’t vary too much from lender to lender. Usually, the borrower will fill out an online application and provide required documents. It is a very simple process and much less paperwork is required than when applying for a bank loan. The borrower is contacted within 48 hours to discuss rates and terms of the loan.
Each hard money lender has their own minimums and maximums of loan amounts. These amounts are based on the borrower’s qualifications and the property. Most lenders will loan on as little as $50,000 and up to 5 million. Unlike conventional loans the FHA doesn’t set terms and limits. The private lender sets their own terms, limits and loan amounts.
Hard money lending rates can range from 7%-15%. These loans are interest-only through the life of the loan, requiring a balloon payment at the end of the loan. There are usually no early payment penalties. And, loans close typically within two weeks. Speak to a local hard money lender to find out more information or contact us at 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.