Hard money loans are mostly used to fund transactions when a sudden turnaround is necessary, for example, a fix-and-flip purchase. Hard money loans allow quicker turnaround due to less bureaucracy. Despite the fact that hard money loans suit residential and commercial properties, you should keep away from loans that involve owner-occupied residences. The number of hard money lenders in the market is very high and to single out the most suitable, ensure you apply the below guidelines.
Ensure you know why you need a hard money loan. You should not take a hard money loan before conducting an exhaustive assessment of your needs. Some hard money lenders focus on foreclosure rescues, or investor financing or commercial properties. On top of enabling you to limit your search to the fitting group of hard money lenders, knowing what you need also enables you to choose those with expertise in money lending.
Choose a local hard money lender. There are many benefits why you need to go for a hard money lender situated near you. A local hard money lender is experienced in giving loans in your market. Moreover, the hard money lender makes sure it is precise in underwriting your asset because it takes into consideration your specific market’s activity. Moreover, local lenders are more interested in your personal success hence giving you more personal attention.
Make sure the degree of transparency is checked. The parties in a hard money borrowing deal should be given access to the loan data that include fees as well as any third party cost. A hard money lender is needed to also act in line with the printed loan program rules. The right hard money lender will not have any issue in returning calls, responding to your questions, and completing draw requests.
You should deal with a licensed hard money lender. You should check a potential hard money lender’s license to be sure it is genuine. This guarantees that their qualifications have been scrutinized by local authorities hence being sure they are professionals in hard money lending. Also, it guarantees that a hard money lender will not charge exploitive loan rates. Moreover, you can check any complaint the hard money lender on your mine left unsolved.
Be keen on the interest rates. Before taking a hard money loan, ask a lender about their interest rates. If you fee that a hard money lender is hiding something, do not borrow from them because you may pay above the agreed upon rates. Additionally, compare the interest rates charged by various hard money lenders while being keen on comments from their past clients in order to decide wisely.