In most cases, Arizona Hard Money Loans are far easier to get than traditional loans and the process is also much faster. But that does not mean that every person who approaches a hard money lender for money is going to have their request funded. And for most of the loans that are denied, the reason is one of three that borrowers overlook. But with a little planning and care, almost every potential borrower can avoid these annoying and sometimes costly mistakes.
The most common reason for Arizona Hard Money Loans to be denied is simple math. The borrower was not prepared to make the standard 25% down payment. This is a pretty across the board number in the hard money game, even though some lenders are willing to accept less equity. Not only does this protect the interest of the lender, but it is a huge motivator for the borrower when he or she has that much of his or her own money tied up in the deal.
The second most common reason to be denied a hard money loan is not having the ability to make the loan payments. No lender is going to willingly offer up money knowing that the borrower is not going to that the revenue or income to make any payments. Hard money lenders are in business to make money on interest and fees. They are not really in the business of waiting for a borrower to default on a loan and then going to the trouble of taking over a property and selling it to recover the initial investment. That is time and expenses that are not in their business plan. They want your monthly payments and to keep the deal simple and profitable.
Always Have A Plan
The final reason that many hard money deals never become a reality is that the borrower does not have an exit strategy in place. The borrower has a plan in place to make the monthly payments, but for some reason, he or she has not figured out how to make that large final balloon payment that comes at the end of the hard money loan term. The plan might be a flip of the property before the loan term ends, or it could be to obtain a traditional loan once the project is completed, but there needs to be a way to show the lender that he or she will get that one final big payment at the end of the loan.
A hard money loan can be much easier to secure than a traditional bank loan, but only if you are aware of the terms and the process. Having the correct down payment, the means to make the payments, and a way to finance the final loan payment are all critical to securing hard money. No lender is going to risk his or her money on a borrower who is not prepared to meet the requirements of this type of private loan.
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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