3 Things You Should Know About Hard Money Lenders

[Corey Dutton]

Real estate investors have long used hard money lenders to finance their real estate investments for reasons of speed and flexibility. But for those who have never taken out a non-bank loan before, there are certain things every real estate investor should know about hard money lenders. Here are just 3 things every real estate investor should know:

1. Not Every One of Them Is Legit: There are a lot of loan scams in the hard money space so be wary of fake lenders who don’t have the ability to do a deal. Most of them are just collecting upfront fees from borrowers!

2. Don’t Assume a Hard Money Loan is Like a Bank Loan: The process of obtaining a hard money loan is completely different from the home mortgage loan process that is typical at your bank or credit union. For example: documentation requirements, valuation determination, speed of funding. These are just three examples of how the process differs greatly between the two types of lenders.

3. Never Expect No Documentation Just Because it’s a Hard Money Loan: So many people assume that just because it’s a hard money loan that there are absolutely no documents required, e.g. loan application, credit report. Although the documentation requirements of a hard money lender may be LESS than a bank lender for a loan approval, it does not mean they are non existent. Each lender has its own list of documentation requirements, so ask and don’t expect or assume that there’s no documentation required.

These are just 3 important things that every real estate investor should know about hard money lenders. Are you a hard money lender yourself, or are you a borrower who is seeking private money financing? What else would you add to this list?

(Article Source: http://privatemoneyutah.com/3-things-to-know-about-hard-money-lenders/ )

Posted by Corey Curwick Dutton, Hard Money Lender

[John Thedford]

Good points. I do HML. I don't require appraisals, app fees, any of that stuff. IMO a true HML lends on the quality and value of the asset. That is exactly what I do. Not once have I ever requested an appraisal, credit report, or app fees. Everything is strictly tied to the property. For the most part my loans have worked out very well. I have never lost on one, but have learned a few things the hard way. I am fond of doing HML and am working with a guy right now that wants 200K. If it makes sense I will fund it within 3 days and close within 5 days.