Whenever you get a loan from a professional lender, which could a lending institution or a private lender, the lender is conducting a business in order to make money. So you know that you are going to pay something for the use of the money that you are borrowing. But what most borrowers do not take into consideration is that added benefits or services are going to cost more. In the case of hard money loans, the added cost also brings with it added value.
It is important that borrowers speak to each lender to determine the fees that he or she charges on hard money loans. These fees can include the basics such as interest and points which you will pay on any loan, but there can be a long list of other fees that lenders will apply. Some of the more common fees include the underwriting fee, application fee, processing fee, referral fee and more. If you feel that there are too many fees to be legitimate, then seek out another lender as each hard money lender is pretty much free to access fees as he or she chooses. But also keep in mind that a few fees such as a small application fee and a processing fee are used to cover the administrative chores involved in the loan process.
There can also be some penalty fees involved in your loan that you will want to understand before agreeing to the loan and signing the loan documents. A late payment fee is fairly self-explanatory. Some lenders will offer a slight grace period but others will charge a hefty fee if the payment is even a single day late. If you are getting to the end of your current loan and cannot make the final large payment, some lenders will extend the loan or do a renewal but there is a cost for that as well. And finally, the lender is counting on a certain amount of profit from the loan in the form of interest. If you pay the loan off early, then the lender loses some of that profit. Many lenders will create an early pay-off penalty that is just about equal to the interest that would be lost due to the early payoff.
Hard money does come at a cost, but there are many benefits including fewer criteria to qualify for the loan and lower credit score requirements. In addition, the loan terms are far more flexible than a traditional loan and the funding is much faster as well. Clearly, the cost offers some important benefits to be considered.
Each borrower needs to decide if Arizona Hard Money Loans and the cost associated with these loans is worth it to make a deal. Some real estate deals are so time sensitive that hard money is the only option to close on a great property before a bidding war begins. Evaluate the costs and decide if hard money is going to land you a great profit or if the cost is too high for you.
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.