Hard money brokers are simply middlemen that work with borrowers and their lenders. Instead of borrowers going directly to a lender and vice versa, they contact a broker. But before we discuss further the roles of these types of brokers, let’s learn a bit of information on hard money in general to understand what these brokers are dealing with. Read on for more information on hard money and hard money brokers below.
A hard money loan is an asset-based loan usually used by real estate investors. If you plan to start a real estate business like purchasing properties, remodeling and then selling them, then you have a choice to get hard money financing as compared to a traditional loan you can get from a bank. Since hard money lending is based on assets, it’s not like a bank loan where you can be approved based on your credit score. With this kind of loan, you are approved based on the asset or property involved. A lender will base his or her decision on the property. Is it a good investment? Will it bring in a favorable profit? These lenders are also called private lenders because they handle their business discreetly. They also don’t have the typical 30-day loan processing time. Instead, they give out the finances needed to the borrower as soon as they approve of the loan. And of course, to approve that loan, they usually ask to look at the property and see for themselves if it is a good investment. So you’re probably wondering where do the hard money brokers come in?
Some lenders don’t communicate directly with the borrowers. There are those lenders offering hard money in large sums and some of them will require a broker to act as a middle man between them and the borrowers. These private lenders are filthy rich. They have a lot of extra cash to fund various investments. Thus, it’s only safe for them to interact only with the brokers. Most of them keep a low profile and manage their business discreetly. That’s why brokers are needed in these large transactions.
Hard money brokers facilitate the larger hard money loans. Sometimes, some of these brokers also have a small funding capacity. And so when a borrower approaches them with a small business venture, they themselves are able to offer the loan. However, when big transactions come in the way, that’s when these brokers find a lender that can accommodate the loan. Of course, they receive fees for rendering their services and those fees are dependent on the amount of the loan.
Hard Money Broker
Hard money loans are made by private lenders and are very different than traditional loans. Hard money lenders can work directly with borrowers or hard money brokers can facilitate loans between borrowers and lenders. Some hard money brokers work in both capacities funding small hard money loans themselves and brokering larger ones. Many people require a hard money loan when buying or investing in real estate, and fortunately California hard money loans are pretty easy to find. There are many California mortgage brokers that can help you find any type of loan you need.
Choosing whether or not to use a hard money broker is the same as deciding to use a regular mortgage broker or approaching individual lenders yourself. There are advantages as well as disadvantages to using a hard money broker and deciding which avenue to take is a decision that you should make carefully.
There is no shortage of California mortgage brokers, and contacting them all directly to find your best deal is a time consuming task. Even finding the best deal on a California hard money loan can take a lot of searching. This is one of the main advantages to using a broker, they do all the leg work for you. A hard money broker may also know of lenders that you may not have considered and may be able to get you financed even if you could not find a lender wiling to take on your loan. A good hard money broker will also be able to assist you in the application process and make sure you have everything you need and that everything in your loan is working to your advantage.
Working directly with a lender has its advantages as well. Not using a broker means that you will probably save money and will not have to worry about paying for a commission for the broker or paying other fees or points. The more people you have involved in the lending process the more you end up paying so dealing directly with a hard money lender will usually allow you to save. The terms of most hard money loans are steep, with high interest rates and other costs so it is important to save where you can. If you want to make sure that you are getting your best deal and do not pay any more that you have to, working directly with a lender is in your best interest. If you need help with the process or cannot find a lender to finance you, a broker may be able to assist you and find you the financing you need.