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What Are Hard Money Brokers?

Hard money brokers

Are you in need of a hard money loan? People with low credit scores or aren’t able to give proof of income to traditional banks and credit unions aren’t able to get a loan. However, hard money loans might solve your financial problems. Learn more about how you can use hard money brokers to get the best loan possible from a lender.

What Are Hard Money Loans

Have you been trying to get a traditional loan? When you have gone through all other financial options, then a hard money loan could help you. It’s easier and faster to get one than traditional ones, which can be beneficial to those who need quick money. Traditional loans take too long and might not be an option for those with low credit.

People might become desperate to help finance their new house flipping business or their investment in real estate. Having the money to purchase a house on the market you want is crucial since it could easily be bought from another buyer.

How Hard Money Lenders Approve You

Getting approval from a hard money broker can be easier than traditional lenders. But you still have to put in the work and effort. You can get approval if the property you want them to invest in is worth it for them. You will have to put up some property as collateral to make the loan a possibility. Without it, you won’t be able to get a hard money loan.

Writing a thorough and organized proposal on how you will repay them will only help you get approval. A sloppy one might not get you far with some investors. Make sure you have an excellent plan for them not to say yes to. Having an exceptional property for them to make a profit off will be a further incentive to approve you for a loan.

However, you shouldn’t be too hasty when you get a hard money loan. According to the Financing Strategies For Real Estate Investments, if you aren’t able to repay the lender, they can “repossess the property because they have a first lien position and will handle it themselves.” This means they have the right to sell the property and take the sell for profit.

What Are Hard Money Brokers

Trying to figure out your first steps after deciding to get this loan might intimidate some. That’s why hard money brokers can come in handy for those who want to get the best deal. Hard money brokers are the middlemen who connect you with hard money lenders that’s right for you and your financial situation.

Hiring A Money Broker

Why do you need a money broker? As reported by the Financing Strategies For Real Estate Investments, hard money lenders will lend about 60-70% loan-to-value of the property you want to put up as collateral. You can’t get a loan that’s 100% worth the value of your home. These lenders need to make money out of their investment in real estate.

So, hiring a money broker can help you connect to lenders who are more likely to invest in the price range that satisfies you. You could search and find excellent money lenders online, but not all of them are willing to contact the borrower directly. Therefore, money brokers can help since they can be a middleman between you and the investors willing to invest in small or large real estates. Without them, you might not have access to investors that maintain a low profile or don’t want to be in contact with the borrower.

However, ask your broker how much they charge you for their services before hiring them. Paying them is another bill you have to think about when hard money loans become your last resort in getting the property you want.

If you are planning on getting a hard money loan, consider hiring a money broker. They can give you excellent connections to investors who match your loan goal or ones who will provide you with the best deal. It can save you more time by having the help of a professional who knows how to deal with busy investors. Research today to see which money brokers are right for you and your family. You can be one step closer to making your house flipping business a reality!

Source: http://ideaexchange.uakron.edu/cgi/viewcontent.cgi?article=1445&context=honors_research_projects

 

 

Hard Money Brokers

Hard Money Brokers and Hard Money Lenders

When you need money quickly, traditional loans are often not the best option because getting approval can be difficult. Many people who are looking to start investing in real estate turn to hard money lenders. Understanding hard money loans is important. This guide walks you through a few things you need to know before choosing hard money brokers.

Your Credit Score Isn’t Important

When you apply for a traditional loan, your credit score is considered to be very important. Hard money brokers aren’t as worried about it because you have to put down something as collateral before you can be approved for the loan. Traditional loans often require 7% as a down payment, whereas, you can use the property that you are buying as collateral or property you already own for hard money loans. The amount of loan you possibly qualify for will be dependent on the value of the property that you are using for collateral. The hard money lenders will typically provide you a loan that covers a portion of the overall value of the property.

Hard money loans are considered to be high risk. If you don’t pay your loan on time, the lender will have to sell the property in an effort to get their money back. If they approve a loan for the full value of the property, getting the money back if you default will be slim to none. According to Consumer Finance, for traditional loans ” Loan amount must be $484,350 or less in most counties and may be as high as $726,525 in high-cost counties. ” Hard money loans do not have such a stipulation.

Interest Rates for Hard Money Brokers are Often Hefty

Hard money lenders do not lend money to people out of the kindness of their hearts. The transaction needs to be profitable for them in order for them to make the loan. This means that they have to charge an interest rate for the loan that takes some of the risks out of it for them. Higher interest rates are attached to hard money loans than traditional loans. Since they require less stringent stipulations to be met, they can be easier to get. This often makes the higher interest rates worth paying for many borrowers.

Approval Takes Less Time

Traditional loans can take a long time for approval. Many stipulations must be met and then the lender, typically a bank, takes often more than a month to approve a loan. When you need money to buy a property that is up for auction or simply selling at a great price, you need to be able to get the money quickly. This is where a hard money loan comes into play. You can often get approved for a hard money loan within a very short period of time. This allows you to never have to miss out on great deals.

Your Loan Needs to be Repaid in a Timely Manner

Hard money loans often have the requirement to be repaired in a very timely manner. The loan agreement has stipulations for when the entire debt needs to be repaid. This is often just a few years or less. You don’t have to make a lump payment to pay it off though. Many people who use the loans do pay it off in a large payment when they sell the property. Most hard money loans are used in the house flipping business.

Choosing Hard Money Brokers Isn’t Difficult

Choosing a hard money lender to work with doesn’t have to be difficult. You simply want to work with a lender that has experience with hard money loans. An experienced lender will have the paperwork already created. They will be able to answer specific details when you ask them and get back to you quickly about whether or not you have been approved for the loan.

Before applying for a hard money loan, you need to know exactly how much money you need. Have an attorney look over the application to ensure that you understand the stipulations of the agreement. You need to be sure you know how much the loan will be for, how long you have to pay it back and what the interest rate will be. Once you are approved for the loan, you can buy your property and get started with your project right away.

Resources:

Consumer Finance – https://www.consumerfinance.gov/owning-a-home/loan-options/conventional-loans/

Down payment for traditional loans – https://www.nerdwallet.com/blog/mortgages/20-percent-mortgage-down-payment-dead/

Definition of hard money loan – https://www.investopedia.com/terms/h/hard_money_loan.asp