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 are good for a quicker turnaround as less bureaucracy is involved. While hard money loans suit commercial and residential properties, you should not take loans involving owner-occupied residences. There are many hard money lenders and you should use the below tips in order to select the best.
Ensure you know why you need a hard money loan. Do not be in haste in taking a hard money loan before you conduct a complete assessment of your needs. A number of hard money lenders only deals with foreclosure rescues, or commercial properties, or investor financing. In addition to narrowing down your search to the appropriate hard money lender, knowing your needs also ensures you get those with professionalism in hard 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 hard money lender in your locality is experienced in issuing 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. Additionally, local lenders have an interest in your personal success thus more personalized attention.
Check the degree of transparency. The parties involved in borrowing a hard money loan ought to be allowed access to the loan data, for example, any third party costs and fees. The hard money lender should as well act in accordance with the published loan program principles. A good hard money lender should not have any difficulty completing draw requests, returning calls or answering your questions.
Ensure a hard money lender is licensed. 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. 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.
You should check the interest rates. Before taking a hard money loan, ask a lender about their interest rates. 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.