Trying to find funding for a hard money loanan seem a bit unnerving. Potential borrowers typically have many questions about the loan process, such as: where do I find a dependable lender and what does the loan process involve?
Potential borrowers can relax. The hard money loanis pretty simple and straightforward when compared to obtaining funding from a conventional lender. The first thing potential borrowers are to find a few hard money lenders that work in the borrower’s area. There are a few ways to find lenders. Networking at local real estate investor meetings is a great way to find lenders looking for business. If you know anyone in real estate, be sure to let them know you are interested in finding a lender. A referral from someone you trust in real estate is a good way to find a reliable lender. Searching the internet for a local lender in the area of the property is always a simple solution. However, be sure to interview the lender. Ask questions such as: How much experience do you have? Do you have references from previous borrowers? Are you a direct lender or a broker? Do you enforce prepayment penalties? How long does it take, after approval, to be funded? What type of license do you hold? Who is your regulator? These are all questions that will either assure you this is a legit lender or will have you running for the hills.
After a few conversations and quotes of some hard money lenders, you should have an idea of which lender they want to use. You want to have the focus be on the terms and conditions of the loan, but you also want to make sure you feel comfortable with your lender. Unlike banks, this is a personal relationship. Lenders are generally flexible and will work with you when issues arise. It is a person you are dealing with, not a corporation.
The first step in the loan process will be filling out the loan application. These are very general questions and only take about 20 minutes to complete. They typically require information about the subject property, borrower’s employment, income and assets, and any liabilities. All lenders are different; some require more documentation than others. Requested documents can include tax returns, proof of down payment, bank statements, any prior real estate projects.
Once all required documents are signed and have been received by the lender, the borrower will send their down payment to escrow. After escrow has confirmed they received everything needed, the hard money lender can disperse funds to escrow and fund the loan. Depending on the type of loan and the geographic area, the borrower will typically receive the funds within two weeks.
This simplicity is the main reason real estate investors take advantage of hard money loans for their financing needs.
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
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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.