The term hard money loans Austin is very often misunderstood by borrowers. Their thought that these are less than legitimate loans is a misunderstanding that could be costing them money.
Hard money loans Austin are loans that are not funded by a traditional bank or credit union. Instead, these loans are funded by an investor or a group of investors. But the loan is still a legal and legitimate loan with a legally binding loan agreement in place. But the main difference between hard money and a traditional loan in that hard money loans Austin are secured through the equity in the property and not the credit-worthiness of the borrower. This fact alone makes hard money a great option for many people who cannot secure a loan from a bank or credit union.
There are many people who choose to use hard money even though the interest rate is higher than that of a traditional loan. But even at a higher interest rate, hard money is great for a buyer with poor credit or no credit, an investor who is carrying multiple loans or property flippers who need to move quickly on purchases and cannot wait for a bank loan application to be approved. Having no other option is fairly self-explanatory and it is easy to understand why those folks are happy to use hard money. But the reasons that investors choose hard money is usually more related to the faster funding and the much easier application requirements.
Rather than a long process of completing application forms, proving debt and income numbers and then waiting for an approval, hard money loans Austin are almost always based solely on what is called the loan to value rate. In these loans, the lender uses an appraisal of the property to determine its current market value. Then the lender determines how much he or she is willing to loan the borrower against the property. Each lender can select his or her own actual percentage, but most will not exceed 70% of the current market value. This is to protect the lender in the event of the borrower defaulting on the loan. The lender can then sell the property to recover the original investment.
Another important difference when borrowing from a private lender is that the terms are not as strictly regulated. This means that private lenders have the ability to negotiate the terms of the loan with the borrower to create a custom loan that works for both parties. This can mean that the length of the loan is customized or that there is a single balloon payment at the end of the loan or even that there is a flat penalty imposed if the borrower pays the loan off early.
Using a hard money lender Austin Texas is not some shady back alley deal, it is simply a loan that is funded by someone other than a bank or credit union. And though the terms of the loan can be different, they can actually work to benefit both the lender and the borrower.
Level 4 Funding LLC
Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.