Here’s how to approach hard money lenders. A hard money loan is a great way to get financing for an investment project and it is commonly used for fix-and-flip projects. Hard money loans are different than the kind of loans you would get at a bank. Though the rates are generally higher, hard money loans allow the borrower to get the financing they need in a matter of days without all of the red tape. Those are the basics. Now you may have some questions about what you should do next.
How do you approach a hard money lender?
Before you go to a hard money lender and ask for a loan, you will need to do plenty of research beforehand. You will definitely not be approved for a loan if you haven’t done any research on the property or know the numbers. As long as you go the lender, make sure that you have your entire project mapped out so that the lenders know that you’re serious about the loan. This will help your chances of being approved especially if this is your first project or your first hard money loan.
Are hard money lenders worried about credit scores?
Short answer: No. Long answer: The reason why hard money loans are so popular is because hard money lenders don’t look at credit, they only look at the assets. How it works is that you get a loan from a private investor and the property that you are purchasing (or any properties you have in your position) can be used as collateral.
What is the average interest rate you can expect?
Hard money lenders normally generating their income from points they charge during the escrow process. Income can be generated also from the interest rate being charged on the mortgage, so the hard money lender will charge 11% on the loan and the trust deed investor will get 10%- In this scenario the hard money lender makes 1% spread. Rates are normally between 8%- 12%, points start at 2.5 from the loan amount.
Where can I find out more?
Learn more by contacting the specialists at HML Investments through phone: 818-308-4443 or email: Info@HMLInvestments.com.Info@HMLInvestments.com