If you are in a situation, where you need financing and you are not willing to wait for the conventional lenders or you are unable to fulfill their extensive documentation requirements.
Then, you have a good option of hard money loans to get funding for your deal.
Now, many people are concerned about whether these hard money lenders are true or not and how to make a right decision?
While looking for hard money lenders, the first and the most important thing to look for are fee collectors.
What do you mean by fee collectors?
Please don’t mistake them as a lender as they are no more than a middle man, who doesn’t fund you any money. They are only interested in making a loan application for you and collect fees.
After this, they just forward your loan application to the real lender, who will fund you and they can charge you from few hundred to few thousand dollars as their fees.
This is absolutely useless and waste of money. You should stay away from these fee collectors, who charge you fees even before you make a loan application, which needs to be avoided.
Another important thing to look for is finding the “real” hard money lender.
You can easily find out whether the lender you are going to is real or not and the easiest way of finding them is their take on credit. If they have a credit score requirement, then they aren’t the real ones but a real lender will only look for the property, you are interested in.
So, the lenders who want every little detail from you about your credit or job history are not the real lenders as their requirements are exactly similar to those of conventional lenders and that is not going to help you in any way.
Finally, I would like to talk about some of the key factors here and amongst them; one of the most important factor is the After Repaired Value (ARV).
Many hard money lenders will only lend you up to 70% ARV.
That 70% will include purchase price of the property and repair costs as well but the calculation of an ARV isn’t very easy.
You need to make sure that your lender is using expert’s advice, who works individually and their values aren’t dependent on anything. These experts should be living in that particular area, where your property is located.
Stay away from those, who use software or different websites for determining the value of ARV.
These were the three easy ways to assure yourself that you don’t fall into the trap of fake hard money lenders.