Residential Hard Money Loans – 3 Crucial Fundamentals!
Category : Bad credit home loans , Hard Money Loans , Real Estate Loans
I am 100% sure that you would not like to end up in a default situation.
But before I discuss all that stuff, I would like to ask some very
important questions…
1. Are you aware about the factors that make residential hard money loans
different from the others?
2. Are you aware of the basic difference between bogus and real
residential hard money lenders?
I would really like you to stop here for a moment and think meticulously
about these two questions. And if you are not able to answer them as “yes”,
then you can’t get success as a real estate investor.
So without wasting further time, let me answer these questions because
they are the first two crucial fundamentals, which you should know before
getting a loan.
What is the basic difference between residential hard money loans and
others?
Majority of people will start by asking the interest rate or payment terms
and conditions while analyzing this question. But they aren’t the most
important factor.
The most important factor here is the criteria, which a lender uses while
funding a loan to you. If he is asking for a credit score before giving you
a loan, this means that they are following the traditional lending rules and
they will sell your paper to banks or Wall Street.
These loans do not have any sovereignty or flexibility, which is vital if
you want to be successful as a real estate investor.
What is the basic difference between real and fake residential hard money
lenders?
There are different aspects which need to be considered while answering
this question. One of the aspect was hidden in my answer to the last
question i.e. a fake hard money lender sells your paper and don’t fund you
directly. This is really bad for you as a borrower. Let me tell you how…
If you are working in a fix and flip situation, there are many things
which can go wrong, whether you have planned for them or not. In this
situation, it is very important to work with a true lender whose success is
attached to yours.
But if your loan has been sold off to Wall Street, you could do nothing in
a problematic situation. You cannot ask for loan extension or anything else
and there are chances that you will end up in a default.
There is another type, which is known as fee collectors. These are the
people who call themselves a lender but they are not. They will just help
you in submitting a loan application and pay fees. After that, you will have
to submit your loan request to the real lender.
These fee collectors don’t care whether your loan application gets
approved or not because they have collected their non refundable fees.
You must be wondering what the third crucial fundamental is.
If you really want to be successful as a real estate investor, you need to
have a perfect plan to execute. You need to realize that real estate
investment isn’t for faint-hearted. It is for those who have a lot of guts
and courage. These are the people who can take quick action and can do
things in a short span of time.
Another important aspect is that hard money loans are short term and if
you are unable to pay it off in time, then you can get in a trouble
situation.
So, these were the three crucial fundamentals, which you need to
understand before applying for residential loans.