Old Myth Prevails: AZ Rehab Loans via Hard Money are Bad News

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Old Myth Prevails: AZ Rehab Loans via Hard Money are Bad News

Should you take on this so-termed-risky funding?

A traditional Arizona Rehab Loan is simply a no-money down financing set up that not only includes the value of the property, but also the costs of renovation and repair. Despite the once-shady reputation of hard money, these loans are offered today by well-known respected firms and real estate investors. They can be obtained through both large and small companies, online and off, and are a proven advantage to both short-term and long-term investors as well.

These loans, falling under the onus of home improvement, are designed to purchase property that needs renovation before occupancy, something most banks won’t touch. Building a new home can be off-putting since most traditional construction’s loans require a credit score of 720. A would-be homeowner can find themselves blocked at all turns with these requirements.

A Hard Money Lender for this particular loan can generally pre-qualify you without any binders attached in order for you to estimate costs, fees, the possible ARV ratio and other related items. The process doesn’t take even an hour’s time. The process looks somewhat like this:

  1. You must show two to three months personal bank statements.
  2. Your credit score has to be a minimum of 550.
  3. You will have to provide the usual information: property address, taxpayer ID, financial history, etc.

What do you need to qualify for this type funding once pre-qualification is completed?

Once prequalification is done, the lender will check your credit score and bank statements to insure you have a steady income and funds available to cover future holding costs that will occur during repair on the property.

Arizona Rehab Loans require a down payment as well. Most lenders want some basic real-estate experience before approving you. A property appraisal will be performed normally by the lender’s own appraiser.

Hard Money Lenders use loan-to-value to determine loans amounts and if the property is in good condition, can lend up to 90 percent. Most of the time, though, even experienced borrowers should expect to come up with 2 percent in personal money.

Closing time, once your loan application is approved, generally takes around 10 to 15 business days. Payments will be interest only (no full amortization) over a term of 12 to 36 months—interest rates can run from 6.99 to 12 percent. Lender points can total 10 percent of the loan value itself. The maximum approval amount after the estimated repair costs can be 75 percent being a combined amount that covers the purchasing price and a credit line that the borrower may draw from for needed repair work.

Is this loan for you?

These loans are taken out by various people and groups: investors, individuals wanting to purchase their own home, fix-and-flippers who buy, repair and sell houses as a business, rental property owners, et al. If you do the research and think you meet qualifications, an Arizona Rehab Loan my just be the helping hand you need to further your real estate ambitions.


Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis
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.

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