Will Hard money lenders in Arizona Help if You Have Large Student Loans?

Student loans impact millions of would-be borrowers and can stop investment dreams in their tracks. However, hard money lenders in Arizona often work with people in these situations and may be more flexible than banks.

Student loan debts are a thorn in the side of roughly 42% of college-educated Americans, with the average new grad having just shy of $30,000 to pay back. It’s taking longer than ever to get these loans paid off, meaning those who have decided to further their educations frequently delay things like homeownership and investing as they whittle away at their debts.

In many cases, chipping away at the debt is good for credit scores. It shows banks that the individual is responsible and is managing payments wisely. However, when grads decide to try to get any other form of loan, it’s often seen as a negative; the individual has too much debt for their income, and the banks worry the burden will stop them from making payments.

This is why many people turn to alternative forms of lending in order to move forward with their dreams of entrepreneurship, home ownership, or wealth planning. Depending on the circumstances, hard money lenders in Arizona can lend a helping hand when banks don’t.

Evaluate the Fiscal Sense of a Loan Before Seeking Alternative Financing

Hard money lenders in Arizona work with a special form of funding. It’s a short-term loan, usually lasting five years or less, and is typically backed by an asset, such as a home. There are different types of loans available for personal and commercial use, meaning it could be an ideal choice if your business needs a cash injection or you’re trying to get into a home and plan to purchase a fixer-upper to save cash. While those financing will still look at how much debt you’re taking on and whether you can make the payments or not, you’ll likely have a bit more wiggle room because you’re using collateral. Moreover, during the period the loan is active, you’ll generally only pay interest, so the monthly payments are comparatively low to traditional loans which require interest and principle paid each month.

Have an exit plan to reduce risk.

The biggest concern when working with hard money lenders in Arizona is that you’ll need to have an exit plan; this form of funding is not a permanent or long-term solution. You’ll either need to pay off your balance in its entirety with your own cash when your term is up or have another form of lending lined up. Some do this by shoring up their finances in the interim, so they qualify for a traditional loan, while others simply sell off the asset. The latter works remarkably well for those who choose to repair a home while living in it, effectively trading their interest-only payment for a rental fee and then selling off the home for profit when the work is done. This approach not only reduces the grad’s expenses, but helps generate additional income to chip away at the student loan debts. Moreover, those with degrees in finance, architecture, or similar areas can apply their learning to their projects, providing practical use of their new skills.