Top 5 Tips on Borrowing From Hard Money Lenders

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Hard money is a type of loan often used in real estate investments. Hard cash loans are also referred to as asset loans, bridging loans, or STABBL loans (Short-Term Asset-Backed Bridging Loans). Hard cash loans are used for short term financing and the loans are always secured by an asset. Traditional financial institutions do not offer cash loans, so this loan option is only available through private lenders and individual investors. You can find the best hard money private lenders in Arizona, at Hilton Financial Corporation. Visit their website and learn more about how they may be able to help you out.

Private Money Loans in Arizona

These types of loans can be a faster and easier way to secure an investment purchase without the need for traditional investment or the endorsement process required by typical financial institutions. Since these types of loans are asset-based, they are not dependent on the creditworthiness of the borrower. 

The term “hard money loan” refers to a type of loan secured by a “solid” asset, such as a property. If you are a real estate investor and need financing for an enterprise transaction, a hard money loan may be a good option to explore.  

But as a real estate investment mentor who often helps clients operate the hard money purchasing process, it is important to first understand all about these loans before making a choice.

  • Fast Process – Unlike conventional mortgages or other types of acquired loans, hard money loans come with a quick and usually less rigorous approval process, making them ideal if you need to make the purchase quickly enough. On the other hand, with a mortgage, it often takes more than a month from application to closing, to buying a property. With hard cash loans, you can close in a matter of days.
  • Timely Procedures – Hilton Financial Corporation provides timely home loans for the acquisition of distressed properties for sale. These projects will probably be in Arizona, Colorado, Ohio and Utah. Loans in Colorado and Ohio are made only between companies. 

This type of funding is considered “opportunity” funding. Typically, borrowers will use this type of financing on projects where banks say no or move too slowly. 

HFC financed properties/projects are expected to have good profit margins in Phoenix, as hard money financing is higher in the interest rate and loan fees than typical bank financing.

  • Have Same Regulations – Hard money lenders clearly don’t have to follow the same regulations as traditional loan lenders have to & this means that they are, for the most part, free to set their own rules on the credit scores or debt-to-income ratios they expect from their borrowers. Therefore, it is possible to find a hard money lender like HFC, who will give you a loan even if you have been turned down by more traditional lenders. For hard money lenders, the most important factor is not the creditworthiness of the borrower, but the value of the property purchased.

Hard money loans can be an exceptional way to help you attain your monetary goals. However, you must have a strategy in place to pay off the loan promptly. This type of loan should never be considered a long term loan, as higher interest rates will end up leaving you with little or no profit in the end. Before embarking on a hard money loan, be sure to analyse the risk versus the reward.

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