Hard Money: Choosing the Right Lender

How to Choose the Right Hard Money Lender

When it comes to business and investments, it is safe to say that most brokers need solid hard money lenders that they can rely upon throughout their professional careers. The same holds true for anyone seeking out a hard money loan. Yes, it is a fact the hard money have higher interest rates than traditional loans; but it is quick and sometimes the only funds that are available to assist clients who have less than favorable credit histories. Here are a few things to consider when trying to decide which hard money lender to go with.

Who would not want rates and terms to be favorable to their situation? It is a known fact that hard money loans are not a way to save money but most lenders will gladly accommodate most terms in order to please their clients. In addition, a good lender will know exactly what they will and will not consider as far as loan terms go. Do not be shocked to see the higher, doubled digit interest rate when being approved, just be comforted in the fact that they are willing to work with you and match your specific needs.

Loan to value (LTV) ratios need to be solid! In real estate, most purchases made are seeking to maximize any leverage they may gain. It is smart to seek out a lender who can actually fund loans that have the highest LTV ratios. In turn, hard money lenders do seek equity and expect their borrowers to pay back any funds within a shorter time frame in comparison to traditional lenders. One thing to be aware of, some lenders may say they can offer you everything under the sun – just beware and go into this with an open mind and know that you have the ability to speak to many lenders before making a final decision.

Ultimately, the hard money lender that you decide to go with should provide open lines of communication at all times and never make you feel uncomfortable in a situation. Even though the loan closes rather quickly, establishing great lines of communication from the beginning will allow transactions and repayment to run as smoothly as possible just in case problems do arise in the future. For example, if repayment terms are unable to be met, the “right” lender will not be interested in seizing your property, they would try to work with you and avoid foreclosure. Just remember that if you are unable to find someone who is knowledgeable and will actually speak to you, you can continue to search for the “right lender” who will.

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