In most cases, hard money loans are used for funding transactions that need a sudden turnaround, for example, fix-and-flip purchase. Due to the lower bureaucracy involved in hard money loans, a quicker turnaround is possible. 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 determine what to do with your hard money loan. You should not take a hard money loan before conducting an exhaustive assessment of your needs. Some hard money lenders deal with either commercial properties, or investor financing, or foreclosure rescues. 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.
Make sure you settle for a nearby hard money lender. There are reasons why you should select a hard money lender near you. A local hard money lender is experienced in giving loans in your market. Also, the hard money lender ensures there is accuracy in underwriting your assets since it takes into account your specific market’s activity. Furthermore, local lenders are after your personal success, a thing that will ensure you get more personalized 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. The hard money lender is also supposed to follow the published loan program guidelines. A suitable hard money lender must return calls, answer your questions, and complete draw requests without any delay.
You should deal with a licensed hard money lender. Ensure you look at a hard money lender’s license for an assurance it is up-to-date. This assures that the local authorities have examined their qualifications thus being sure they have the right skills for hard money lending. Also, it guarantees that a hard money lender will not charge exploitive loan rates. Besides, you can know if there is any complaint a hard money lender did not address.
You should check the interest rates. Before deciding to take hard money loan from a lender ask them to explain their loan 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.