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UNDERSTANDING THE HARD MONEY LOAN PROCESS

Maybe you have played with the idea of becoming a real estate investor. Understanding the process of getting a Texas hard money lenders is the first step in becoming an investor.

All hard money lenders are different. They all have different requirements and niches. Some will loan a percentage based on purchase price, while others will loan on the after repair value (ARV). When you meet with the lender they will give you a breakdown of your fees and their terms. They will explain the loan points, the closing costs, which will include notary fees, escrow fees and any document fees and the interest amount you will be responsible for paying.

An example of this may be a loan of 75% ARV, with 5 points, $750 in document fees and a 12 month interest only loan that includes a balloon payment loan at 9% due at the end of the loan. What that looks like for the borrower on a property that has a purchase price of $100,000 and an ARV of $175,000 is the lender financing 75% of $175,000 which is $131,250. To get the loan you will pay the loan points and document fees. However, many lenders will wrap those fees into the loan.

THE BREAKDOWN OF THE HARD MONEY LENDING PROCESS

The first step a potential investor will do is pre-qualify. Speak to the lender and find out what the requirements of you will be. Then, after you pre-qualify go property hunting. Find a great deal and work at getting it under contract. Once you are approved for a Texas hard money loan you will be funded in less than 10 days. Sellers love to work with hard money because there are rarely any hangups or pulling out of deals.

After you have found the right property, contact the hard money lender and give them the information concerning the purchase price, the repairs and hopefully an ARV. However, you may need to find an appraiser to give you an accurate ARV. Your hard money lender will help you in finding an appraiser. Following this, your lender will most likely request escrow documents and verify paperwork. Typically, you will hear from the lender on approval status in less than 48 hours. And, the next step is closing the loan.

In many ways a Texas hard money loan is very similar to a conventional loan.

The lender still puts the loan amount into escrow. The title company still issues checks. If the buyer is getting excess funds from the loan that check will be issued. All paperwork has to be completed and in order and funds have to be allotted to the correct individuals. The big difference is the time. While conventional loans can take up to 90 days to close, it is rare to see a Texas hard money loan take longer than 14 days to close. Qualifying for a Texas hard money loan is much less stressful and easier than qualifying for a conventional loan. This is a simple, quick and effective way to finance real estate projects.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
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@level4funding.com

Dennis Dahlberg Broker/RI/CEO

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.