Residential Hard Money Loans – 3 Crucial Fundamentals!

Residential Hard Money Loans – 3 Crucial Fundamentals!

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.


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