How to Choose a Hard Money Lender
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. 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. A number of hard money lenders only deals with foreclosure rescues, or commercial properties, or investor financing. 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 hard money lender in your locality is experienced in issuing loans in your market. In addition, the hard money lender is accurate in underwriting your asset as they have your specific market’s activity on their mind. Additionally, local lenders have an interest in your personal success thus more personalized attention.
Check the degree of transparency. The parties involved should have the ability to access the loan data such as fees and any third party cost so they can know what is expected. 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 peruse the license of your hard money lender to ensure it is valid. This assures that the local authorities have examined their qualifications thus being sure they have the right skills for hard money lending. In addition, you are sure the loan rates a hard money lender charges are not exploitive. 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. 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. Also, compare interest rates of different hard money lenders while being keen on what past clients say to ensure you make a suitable decision.