Tips for Selecting a Hard Money Lender
Hard money loans are usually used to pay for transactions when one needs a sudden turnaround such as a fix-and-flip purchase. Hard money loans are good for a quicker turnaround as less bureaucracy is involved. 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 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. 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.
Ensure the hard money lender you choose is from your location. 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. In addition, the hard money lender is accurate in underwriting your asset as they have your specific market’s activity on their mind. Moreover, local lenders are more interested in your personal success hence giving you more personal attention.
Make sure the degree of transparency is checked. 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. The hard money lender should as well act in accordance with the published loan program principles. 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. 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. 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 taking a hard money loan, ask a lender about their interest rates. If a hard money lender does not seem clear about their interest rates, avoid them or you will pay more than the agreed rate. Also, compare interest rates of different hard money lenders while being keen on what past clients say to ensure you make a suitable decision.