A hard money loan refers to a specific type of asset-based loan that is secured by real property. Unlike traditional mortgage loans, one can get hard money loans using only physical property as collateral.
Types of Hard Money Loans
For people with bad credit, hard money loans may be the only way to secure funding to purchase their dream real estate property. There are a wide variety of hard money loans. Listed below are some of the most preferred ones.
Mortgage refinancing occurs when one pays off an existing mortgage loan using the funds from a new mortgage loan. In such an instance, the new mortgage effectively replaces the old one.
Before opting to take a mortgage refinancing loan, there are certain questions that you should ask yourself. First, you should ask yourself how long you want to stay in the home. It’s advisable that you take up a refinancing loan only if you’ll stay in the home long enough to reach the break-even point.
Secondly, you should ask yourself whether your financial situation demands that you take up a mortgage refinancing loan. For example, if your earnings have been cut, you should contemplate taking up a mortgage refinancing loan that has lower rates and allows for a longer repayment period than your current mortgage.
All in all, mortgage refinancing loans have been of massive help to many. These loans have also been disastrous for some. Before making a final decision, you should consider contacting a professional hard money lender for expert advice.
Cash-out refinances refer to a type of hard-money loan whereby the buyer decides to take out a new loan larger than all of the old loans and the costs to obtain the loan. Most homeowners usually take out this loan as it usually allows them to remain with some money. This remaining money is normally referred to as “cash to the borrower.” Many often use this remaining money to pay off debts, refurbish their homes and many other financial needs.
On numerous occasions, cash-out refinances have bailed out so many individuals. However, before taking out one, it’s advised that you seek advice from accredited hard money lenders in Alabama. Without their advice, you may end up with serious financial issues.
Home equity loans are loans that allow one to borrow against their home’s value minus the amount of any outstanding mortgages on the property. Home equity loans have quite a good number of benefits. One of the benefits is that, according to the IRS, one can claim a tax deduction for the interest he/she pays if he/she uses the loan to buy, build, or substantially improve their home. Another benefit is that you’ll pay less interest when you take out a home equity loan than when you take out a personal loan.
Various hard money lenders offer the types of hard money loans that have been stated above. However, not all of them are as reliable as they claim.
Before settling on a given hard money lender, there are certain steps you should follow. Here are some of the said steps.
Prior to settling on a given hard money lender, the very first step you should carry out is to seek referrals from those around you that have, at one point or another, borrowed from one. By doing this, you can easily obtain a shortlist of lenders you should choose from.
Conduct Thorough Background Checks
After getting the references, the second step you should follow is to conduct thorough background checks on them. By carrying out this simple yet very vital step, you get to learn more information about them. Using the information, you can easily determine which of the suggested hard money lenders you should engage.
Carry Out Face-To-Face Interviews
It’s always advisable that before making a final decision on which hard money lender you should borrow from, you carry out face-to-face interviews with all of the suggested hard money lenders. During these interviews, you should ask questions whose answers can bring out their characters. If a given hard money lender keeps dodging the questions, it’s advisable not to engage him/her.
Go Through Each References Past Clients’ Reviews
Similar to background checks, past clients’ reviews usually go a long way in describing the trustworthiness of a given hard money lender. The more positively reviewed a given hard money lender is, the more trustworthy he/she is.
Qualities to Look for In A Hard Money Lender
In the past, many have complained of being led astray by their preferred hard money lenders. To avoid facing a similar predicament, there are some certain qualities that you should ensure that your hard money lender-of-choice possesses. Here are some of the said properties.
Before you decide to hire a given hard money lender, it’s in your best interest to ensure that he/she is reliable. You can ascertain his/her reliability by simply going through his/her track record or even getting to know more about his/her background. There is nothing as disappointing as hiring an unreliable hard money lender. By following these simple steps, you can easily avoid hiring one.
In all sectors, experienced professionals tend to be better than their lesser experienced counterparts. As such, it’s essential that before you hire a given hard money lender, you ensure that he/she is adequately experienced. By hiring an experienced hard money lender, you can rest assured of getting the top-notch assistance and expert guidance that you require.
It’s a well-known fact that knowledgeable hard money lenders tend to offer better assistance to their clients in comparison to their lesser knowledgeable counterparts. As such, before hiring a given hard money lender, you must ensure that he/she is adequately knowledgeable. By hiring a knowledgeable, hard money lender, you can rest assured of getting proper advice on which hard money loan you should take out. Without proper advice, you may find yourself in deep financial trouble.
Although there are many hard money lenders throughout the country, not all of them are as trustworthy as they claim. As such, before hiring a given hard money lender, you must ensure that he/she is trustworthy. Trustworthy, hard money lenders are usually pretty transparent. This is normally because they have their clients’ best interests at heart. By hiring a hard money lender who’s known to be trustworthy, you can rest easy as you’re certain that he/she has got your back.
A good hard money lender must be attentive and responsive to the needs of their clients. As such, when hiring a hard money lender, you must ensure that he/she is quite attentive. It’s worth noting that a good hard money lender should act as a second pair of eyes and ears. When going over documentation and agreements with your preferred contractor, he/she should be able to spot any breach that may not be in your interest. The keener your hard money lender-of-choice is, the more secure you are.
Reputation matters. Before deciding on a particular money lender, you must ensure that he/she has a good reputation. It’s common knowledge that hard money lenders with good reputations often cater to the interests of their clients. Unlike hard money lenders with negative reputations, they normally ensure that their clients’ needs are satisfied. Avoid being a victim of sketchy hard money lenders. When searching for a hard money lender, go for one with a positive reputation.
When hiring a hard money lender, do ensure that he/she has all the mentioned qualities.