Hard money loans are not or everyone or every situation. But there are several cases where hard money is the best solution.
Hard money loans are loans that are funded by individuals or small groups rather than from a bank or other lending institution. For this reason, these loans are often referred to as non-traditional loans. Because the finding is not coming from a bank, there is more opportunity for flexibility on the terms of the loan which makes them well suited for certain borrowers specific needs. And in most cases, hard money is loaned for a short period of time which can typically range from a year or less to about five years. But again, these terms are all flexible and can be negotiated with the lender. So other important items to note about hard money loan are that the rates for the loan are higher and there can be additional fees charged for funding.
In most cases, it makes sense to assume every borrower would seek the lowest interest rate possible for every loan. But in the case of flippers or real estate investors who are renovating and then selling a property, speed and less hassle can be worth paying a few extra percentage points on the loan. Flippers are working in a very competitive market and need to act fast when a property with great potential comes on the market. Waiting 30 days to hear back from a bank about a 15-year mortgage is not going to meet this investor’s needs. But a turnaround of less than a week is definitely going to be helpful. And many sellers who are familiar with hard money look at an offer including hard money funding as a definite advantage. They know that the funding will occur quickly and the property will close in just days.
Builders are another group who are not interested in investing months in the application and approval process required by banks. Builders have no intention to keep a property for 15 years. The plan is to purchase the property, build the house and sell as soon as possible. This makes the fast turn around and easy application process of hard money loan a perfect choice.
Not everyone has perfect credit and sometimes the cause was beyond the person’s control. Mounting medical bills, the loss of a job, divorce or a death in the family can all result in an inability to pay bills and the deterioration of good credit. But working all the way back to good credit can take many years. In the meantime, many consumers turn to hard money as a way to get a loan, get back on their feet and begin their financial recovery.
Hard money is not a universal solution to money problems and if used improperly it can be very harmful. But there are many times when using hard money is the best option. The easy application and approval process and the fast funding made this alternative resource a great choice for many borrowers.
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.