When searching for a hard loan, it’s crucial to make sure you’re working with a company that focuses on making loans instead of brokers. Although hard money lenders may have the best rates, it’s important to remember that brokers do not make the final decision.
Instead, you should be working with the people who make the loan decisions and are not interested in making a commission. These are your hard money lenders. However, be aware that these companies tend to have higher fees than other hard loan providers.
It can be difficult to decide how to find a reliable hard money lender, and some companies may promise the world before they close. However, you can get referrals from your friends or family to help you narrow down your search. Hard money lenders are more willing to negotiate, and your peers’ experiences will help you decide which lender is right for you. If possible, ask them for references or even ask them to recommend a particular hard money lender.
One way to identify a reliable hard money lender is to ask if they have worked with previous clients. Ask if they have worked with repeat clients or not. If they haven’t, it may be an indication that the lender is new in the industry, or is unable to provide good service. If they have, however, had a successful business in the past, it’s best to go with someone with more experience in this type of lending.
In addition to checking the credentials of the lender, borrowers should also make sure to know their plans for exiting the loan. Hard money lenders want to know that their clients have researched their investment deals, have extensive experience with contractors, and are prepared to spend over the loan amount on contingencies. They want to know that the borrower is ready for any contingency, whether that be a renovation overage, or the need for multiple exit strategies.
As a rule, hard money lenders prefer borrowers with some assets to have less. A typical hard money borrower has assets, such as a home, car, or even a piece of land. These assets are essential to the loan process. A hard money lender will typically be more lenient with these assets than they would with traditional mortgages. Hard money lenders don’t care about a borrower’s credit score; instead, they focus on the value of the property.
Despite these advantages, it’s important to keep in mind that the interest rates of hard money loans vary widely. In addition to double-digit interest rates, these lenders typically charge higher loan origination fees. These fees are around 2 percent of the loan amount, compared to a bank loan of one percent. Before signing on the dotted line, make sure the lender has a low interest rate and does not charge excessive fees. If a hard money lender does offer such low interest rates, make sure you shop around for the best deal.
A hard money loan is often faster and easier to obtain than a conventional loan. The interest rates for a hard money loan are generally higher than the interest rates of conventional loans, but they are offset by the ease of access to funds.