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. Although hard money loans area favorable for commercial and residential properties, loans involving owner-occupied residences are not recommendable. There are numerous hard money lenders and to select the best, take into account the below factors.
Ensure you determine what to do with your hard money loan. Do not be in haste in taking a hard money loan before you conduct a complete assessment of your needs. Some hard money lenders deal with either commercial properties, or investor financing, or foreclosure rescues. Knowing your needs will not only help you to focus your search on the right hard money lenders but also ensure they are professionals in hard money lending.
Ensure the hard money lender you choose is from your location. 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.
Check the degree of transparency. 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.
Ensure a hard money lender is licensed. You should peruse the license of your hard money lender to ensure it is valid. This guarantees of their qualifications having been vetted by the local authorities to ensure they are qualified for hard money lending. Additionally, you are sure a hard money lender is not going to charge exploitive loan rates. Furthermore, if a hard money lender failed to address any complaint, you will know of it.
Be keen on the interest rates. Before applying for a hard money loan, ensure you know the interest rate a lender charges. In case a hard money lender seem like they are hiding something, do not continue with the deal as this may make you pay higher rates than initially agreed. Also, compare interest rates of different hard money lenders while being keen on what past clients say to ensure you make a suitable decision.